Exhibit 10.12


 


SUBLEASE


 


THIS SUBLEASE is dated for references purposes only
as of July 6, 2006, and is entered by and between OPENWAVE SYSTEMS INC., a
Delaware corporation (“Sublessor”), and PDL BIOPHARMA, INC., a Delaware
corporation (“Sublessee”). Sublessor and Sublessee hereby agree as follows:


 


1. Recitals: This Sublease is made with
reference to the fact that Pacific Shores Development, LLC,
predecessor-in-interest to Pacific Shores Investors, LLC, a Delaware limited
liability company (“Master Lessor”), as Lessor, and Sublessor, under its
previous name of Phone.Com, Inc., as Lessee, are parties to that certain
Triple Net Building Lease, dated as of February 4, 2000 (“Master Lease”),
with respect to certain premises (the “Premises”) comprising that certain
building commonly known as Building 9, Pacific Shores Center, with an address
at 1400 Seaport Boulevard, Redwood City, California 94063 (“Building”). The
Building is located within Pacific Shores Center, Redwood City, California
(“Project”). A copy of the Master Lease is attached hereto as Exhibit A.


 


2. Premises and Common Areas:


 


A. Premises. Sublessor hereby subleases to
Sublessee, and Sublessee hereby subleases from Sublessor, the entire Premises
(“Subleased Premises”). The Subleased Premises, the Building and the Project
are more particularly described in the Master Lease.


 


B. Common Areas. During the Term, Sublessee
shall have the non-exclusive right to use the Common Area described in, and
pursuant to, the provisions of Section 2.02 of the Master Lease. Sublessee
shall use the Common Area in accordance with such reasonable rules and
regulations as are established by Master Lessor. Said use of the Common Area
(including without limitation amenities/athletic facility/baseball and soccer
fields) shall be provided at no additional cost or charge to Sublessee and its
employees for user fees or otherwise, except as expressly provided in the
Master Lease for reimbursement of repair, replacement and maintenance costs and
such other costs charged by Master Lessor with respect thereto as part of
Master Lease Additional Rent (as defined in Section 4.B. below), and
except for any governmental or public authority charges, fees or impositions of
any nature imposed against the Sublease or the Sublessee’s use of the Common
Areas during the Term.


 


3. Term:


 


A. Term. Subject to (i) Sublessor’s
having obtained Master Lessor’s Consent to this Sublease as described in
Paragraph 25 below, and (ii) execution and delivery of the Future Lease by
Sublessee and Master Lessor as described in Paragraph 3.B below, the term of
this Sublease (“Term”) shall be for that period commencing on the earlier of (a) January 1,
2007, and (b) the date that is ninety (90) days after Sublessee’s
completion of the Sublessee Improvements (as defined in Section 14.B.
below) (“Commencement Date”), and ending on April 29, 2013 (“Expiration
Date”), unless this Sublease is sooner terminated pursuant to its terms, or the
Master Lease is sooner terminated pursuant to its terms. Sublessor shall
deliver the Subleased Premises to Sublessee in the condition required by this
Sublease on November 1, 2006 (“Premises Delivery Date”). If Sublessor is
unable to deliver possession of the Subleased Premises to Sublessee by the
Premises Delivery Date for any reason whatsoever, Sublessor shall not be
subject to any liability therefor, nor shall such failure affect the validity
of this Sublease or the obligations of Sublessee hereunder, or extend the


 


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Expiration
Date, but in such case Sublessee shall not be obligated to perform any
obligation of Sublessee hereunder with respect to the Premises until Sublessor
delivers possession of the Subleased Premises to Sublessee in the required
condition, and the Commencement Date shall be extended for a reasonable period
of time to the extent that Sublessor’s delay causes any delay in completion of
the Sublessee Improvements. Sublessor and Sublessee promptly shall execute a
Commencement Date memorandum establishing the Commencement and Expiration Dates
promptly after the Commencement Date has been determined. Sublessee’s failure
to execute the Commencement Date memorandum shall not affect the validity of
this Sublease or the dates set forth therein.


 


Notwithstanding the foregoing, in the event that
Sublessor fails, as a result of occurrences other than a Sublessee default
hereunder or Force Majeure Delay (as defined in Section 17.21 of the
Master Lease), to deliver to Sublessee the Master Lessor’s Consent, the
provisions of Paragraph 25 below shall control. Also notwithstanding the
foregoing, in the event that (i) Sublessee and Master Lessor fail to
execute and deliver the Future Lease within fifteen (15) days after the
date of full execution of this Sublease (the “Execution Date”) by Sublessor and
Sublessee (“Future Lease Outside Termination Date”), and/or (ii) Sublessor
fails, as a result of occurrences other than a Sublessee default hereunder or
Force Majeure Delay (as defined in Section 17.21 of the Master Lease), to
deliver to Sublessee the Subleased Premises on or before the date that is
thirty (30) days after the Premises Delivery Date (the “Premises Delivery
Outside Termination Date”), then Sublessee and Sublessor shall have the right,
but not the obligation, to terminate this Sublease. Such termination shall be
accomplished by providing written notice thereof to the other party within ten (10) days
after the Future Lease Outside Termination Date or the Premises Delivery
Outside Termination Date, as applicable, in which case this Sublease shall
terminate on the day following the last day of the applicable ten (10)- day
notice period (unless Sublessee and Master Lessor execute and deliver the
Future Lease, and/or Sublessor delivers the Subleased Premises to Sublessee, as
applicable, during such ten (10)- day period, in which case this Sublease shall
remain in full force and effect), neither party shall have any further rights
or obligations hereunder, and Sublessor shall return to Sublessee all sums
(including the Letter of Credit [as defined below], if any) paid by Sublessee
to Sublessor in connection with Sublessee’s execution hereof. The return of all
sums paid by Sublessee to Sublessor shall be Sublessee’s sole and exclusive
remedy in the event of a termination pursuant to this Paragraph. However,
Sublessor agrees to use commercially reasonable diligent, good faith efforts to
deliver the Subleased Premises to Sublessee on the Premises Delivery Date, and
Sublessee agrees to use commercially reasonable diligent good faith efforts to obtain
the execution and delivery by Sublessee and Master Lessor of the Future Lease
as soon as possible.


 


B. No Option to Extend; Future Lease. The
parties acknowledge that Sublessee has no option to extend the Term of this
Sublease. However, concurrently with the execution of this Sublease, Sublessee
and Master Lessor have executed and delivered, or plan to execute and deliver,
a lease agreement whereby Sublessee shall continue in occupancy of the
Subleased Premises following the Expiration Date as a direct tenant for the
Subleased Premises (the “Future Lease”). Sublessee shall attempt in good faith
to obtain the execution and delivery of the Future Lease by Sublessee and
Master Lessor as soon as possible, but not later than fifteen (15) days
after the Execution Date. No costs or expenses associated with the execution
and delivery of the Future Lease shall be borne by Sublessor. If the execution
and delivery of the Future Lease by Sublessee and Master Lessor is not obtained
within fifteen (15) days after the Execution Date, the provisions of Section 3.A.
above shall control.


 


C. Early Entry. For the period commencing on
the Premises Delivery Date and continuing until the Commencement Date (“Early
Entry Period”), Sublessee shall have the right to enter the Subleased Premises
for purposes of constructing the Sublessee Improvements and installing its
trade fixtures, furniture, equipment, cabling and wiring. Such early entry
shall be subject to all of the terms and conditions of this Sublease
(including, without limitation, obligations relating to Sublessee’s insurance)
except for the


 


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obligation
to pay Rent; provided, however that during the period of Sublessee’s
construction work in the Subleased Premises, Sublessee shall be obligated to
pay all utilities costs for the Subleased Premises. Notwithstanding anything to
the contrary contained in this Sublease, Sublessee shall not have the right to
commence demolition in preparation for or construction of the Sublessee
Improvements during the Early Entry Period in any portion of the Subleased
Premises unless and until both Sublessor and Master Lessor have approved
Sublessee’s plans for the Sublessee Improvements pursuant to the provisions of Section 14.B.
below. Further, prior to the Premises Delivery Date, Sublessee shall have no
right of possession or occupancy of the Subleased Premises, and Sublessor
reserves the right to make any use of the Subleased Premises that is not
inconsistent with Sublessor’s obligation to deliver the Subleased Premises to
Sublessee as of the Premises Delivery Date.


 


4. Rent:


 


A. Monthly Base Rent. Commencing on the
Commencement Date and continuing throughout the Term, Sublessee shall pay to
Sublessor monthly base rent (“Monthly Base Rent”) for the Subleased Premises in
equal monthly installments as set forth below:


 




	
  Months

  	
   

  	
  Base Rent

  	
   

  
	
  1 - 24

  	
   

  	
  $223,581.85 per month

  	
   

  
	
  25 – Expiration Date

  	
   

  	
  $268,864.25 per month

  	
   

  






 


As used herein, “month” shall mean a period
beginning on the first (1st) day of a calendar month and ending on the
last day of that month. Monthly Base Rent shall be paid on or before the first
(1st) day of each month. Rent (as defined below) for any period during the
Term hereof which is for less than one month of the Term shall be a prorata
portion of the monthly installment based on the number of days in such month.
Rent shall be payable without notice or demand and without any deduction,
offset or abatement, in lawful money of the United States of America. Rent
shall be paid directly to Sublessor at Openwave Systems Inc., 2100 Seaport
Boulevard, Redwood City, California 94063, Attn: Real Estate Department, or
such other address as may be designated in writing by Sublessor.


 


This Sublease is an “Absolute Triple Net” Sublease.
Except as expressly provided in this Sublease (i) Sublessor shall receive
the Monthly Base Rent free and clear of any and all expenses, costs,
impositions, taxes, assessments, liens or charges of any nature whatsoever
payable by Sublessee pursuant to this Sublease, and (ii) Sublessee shall
not be entitled to any abatement of or reduction in Rent payable under this
Sublease.


 


B. Additional Rent. In addition to Monthly
Base Rent, commencing on the Commencement Date and continuing each month
thereafter throughout the remainder of the Term, Sublessee shall pay to
Sublessor as additional rent under this Sublease (“Sublease Additional Rent”),
at the time that Sublessee pays Monthly Base Rent or, if so notified by
Sublessor in writing, within twenty (20) days after receipt of Sublessor’s
invoice therefor, one hundred percent (100%) (“Sublessee’s Share”) of all
“Additional Rent” (as defined in Section 4.05(a) of the Master Lease,
and hereinafter referred to as “Master Lease Additional Rent”) with respect to
the Subleased Premises during the Term, including, without limitation, all
taxes, assessments, fees and other impositions payable in accordance with the
provisions of Article XI of the Master Lease, insurance in accordance with
the provisions of Article VII of the Master Lease, operating charges and
Common Area facility use privilege charges with respect to the
amenities/athletic facility (in lieu of any separate use charge to employees
who use said facility, the baseball and soccer fields), as well as maintenance,
repair and replacement costs and expenses, utility charges and other costs and
charges allocable to the Common Area and the Common Area facilities and the
Outside Areas of the Subleased Premises, all in


 


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accordance
with the provisions of Article VI of the Master Lease, and any other
charges, costs and expenses (including appropriate reserves therefor) which are
contemplated or may arise under any provision of the Master Lease during the
Term, plus the Management Fee described in Section 4.05 (a) of the
Master Lease, payable by Sublessor under the Master Lease during the Term.


 


Pursuant to Section 4.05(b) of the Master
Lease, Master Lessor is required to provide a “Lessor’s Statement” of the
actual expenses for the Premises as compared to the estimated payments made
throughout the applicable calendar period. Following Sublessor’s receipt of
such Lessor’s Statement from Master Lessor, Sublessor shall promptly forward a
copy to Sublessee, and there shall be an adjustment between Sublessor and
Sublessee for any over- or under- payment of such Master Lease Additional Rent
items for the preceding calendar period, with payment to Sublessor or credit to
Sublessee against the next installment of Sublease Additional Rent (or refund
following the expiration of the Sublease Term), as the case may require, within
thirty (30) days after Sublessor’s delivery of such reconciliation to
Sublessee. Attached hereto as Exhibit E is a true and correct copy
of the most recent reconciliation for the Subleased Premises received by
Sublessor from Master Lessor.


 


Pursuant to Section 4.07 of the Master Lease,
Sublessor has a right to review supporting data for any Lessor’s Statement. If,
within ten (10) days after receipt of the Lessor’s Statement from
Sublessor, Sublessee notifies Sublessor that Sublessee desires to review the
supporting data and identifies for Sublessor those items it wishes to
challenge, Sublessor shall forward to Master Lessor Sublessee’s statement prior
to the end of the thirty (30)- day period identified in Section 4.07(1),
and Sublessee may exercise the rights set forth in Section 4.07 in strict
accordance therewith. If Sublessee does not timely meet the requirements of Section 4.07,
or if Master Lessor does not comply with the provisions of Section 4.07,
Sublessor shall have no liability to Sublessee with respect thereto other than
the obligation set forth in Paragraph 24.A.(iv) below, and Sublessee shall
indemnify Sublessor for any liability Sublessor incurs as a result of
Sublessee’s failure to comply with the provisions of Section 4.07 of the
Master Lease.


 


Except as otherwise provided in this Sublease,
Sublessee also shall be responsible for payment of all other monetary
obligations of Sublessor to Master Lessor under the terms of the Master Lease,
including, without limitation, pursuant to Section 17.04, applicable to
the Subleased Premises for the Term, except to the extent such Master Lease
Additional Rent is incurred as a result of Sublessor’s default under the Master
Lease or this Sublease. Sublessee also shall pay Sublessee’s own telephone,
telecommunications, internet and data communications charges.


 


All monies required to be paid by Sublessee under
this Sublease (except for Monthly Base Rent, as defined in Paragraph 4.A.)
shall be deemed Sublease Additional Rent, and Sublessor shall have all rights
and remedies for the non-payment of same as it would have for non-payment of
Monthly Base Rent. Monthly Base Rent and Sublease Additional Rent hereinafter
collectively shall be referred to as “Rent.”


 


Notwithstanding anything to the contrary contained
in this Sublease, if Sublessee elects to occupy the Subleased Premises for
purposes of conducting business thereon prior to the Commencement Date, from
and after such date Sublessee shall pay to Sublessor the Master Lease
Additional Rent applicable to the Subleased Premises.


 


C. Payment of First Month’s Rent. Upon
execution of this Sublease by Sublessee, Sublessee shall pay to Sublessor the
sum of $223,581.85, which sum shall constitute Monthly Base Rent for the first
month of the Term.


 


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5. Security Deposit: Subject to the
provisions of Paragraph 34 below, upon the execution of this Sublease by
Sublessee, Sublessee shall deposit with Sublessor, in cash, the sum of
$268,864.25 as security for the performance by Sublessee of the terms and
conditions of this Sublease (“Security Deposit”). If Sublessee fails to pay
Rent or other charges due hereunder or otherwise defaults with respect to any
provision of this Sublease, then Sublessor may, but shall not be required to,
draw upon, use, apply or retain all or any portion of the Security Deposit for
the payment of any Rent or other charge in default, for the payment of any
other sum which Sublessor has become obligated to pay by reason of Sublessee’s
default, or to compensate Sublessor for any loss or damage which Sublessor has
suffered thereby. The Security Deposit is not an advance payment of Rent or a
measure or limit of Sublessor’s damages upon Sublessee’s default under this
Sublease, and Sublessor shall not be required to keep the Security Deposit
separate from Sublessor’s general funds or to pay interest thereon. Sublessor
shall not be deemed a trustee of the Security Deposit. Sublessee hereby waives
any restriction on the use or application of the Security Deposit by Sublessor
as may be set in any applicable law, including, without limitation, Section 1950.7
of the California Civil Code, as it may be amended. The use, application or
retention of the Security Deposit, or any portion thereof, by Sublessor shall
not prevent Sublessor from exercising any other right or remedy provided by
this Sublease or at law or in equity, it being intended that Sublessor shall
not first be required to proceed against the Security Deposit, and the Security
Deposit shall not operate as a limitation on any recovery to which Sublessor
otherwise may be entitled. If Sublessor so uses or applies all or any portion
of the Security Deposit, then Sublessee shall, within five (5) days after
demand therefor, deposit cash with Sublessor in the amount required to restore
the Security Deposit to the full amount stated above. Failure to make such
deposit when due shall be a material default under this Sublease, without any
requirement for prior written notice thereof from Sublessor. Within thirty
(30) days after the later of the expiration or earlier termination date of
this Sublease, if Sublessee is not then in default hereunder, Sublessor shall
return to Sublessee (without interest) so much of the Security Deposit as has
not been applied by Sublessor pursuant to this Paragraph, or which is not
otherwise required to cure Sublessee’s defaults.


 


6. Parking: During the Term, Sublessee shall
have the right to use the parking spaces for the Subleased Premises described
in, and pursuant to, the provisions of Section 2.03 of the Master Lease.
Sublessee shall use the parking area in accordance with such reasonable rules and
regulations as are established by Master Lessor. Said parking shall be provided
at no additional cost or charge, except as expressly provided in the Master
Lease for reimbursement of repair, replacement and maintenance costs and such
other costs charged by Master Lessor with respect thereto as part of Master Lease
Additional Rent, and except for any governmental or public authority charges,
fees or impositions of any nature imposed against the Sublease or the
Sublessee’s use of the parking spaces during the Term.


 


7. Condition of Premises: Sublessor
represents and warrants for the benefit of Sublessee, to the knowledge of
Sublessor that, as of the Premises Delivery Date, the following two
representations and warranties shall be true and correct. Whenever a
representation or warranty is being made to Sublessor’s knowledge in this
Sublease, such qualification indicates that the warranty is being made to the
current actual knowledge of Thomas Masles, Sublessor’s Vice President, Global
Real Estate and Facilities, without any implied, imputed or constructive knowledge
and without any independent investigation having been made or any implied duty
to investigate.


 


A. Compliance with Laws. The Subleased
Premises, including the tenant improvements installed by Sublessor, are in
compliance with all applicable laws, regulations, building codes and ordinances
(collectively, “Applicable Laws”), including, without limitation, the Americans
with Disabilities Act of 1990 (“ADA”). If at any time during the period
commencing with the date of Sublessee’s receipt of comments from the City of
Redwood City (“City”) to Sublessee’s plans for the Sublessee Improvements and
continuing until the earlier of (i) ninety (90) days thereafter and (ii) the
date that Sublessee commences demolition in


 


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preparation for and/or construction of the Sublessee Improvements,
Sublessee discovers that the foregoing sentence was not true as of the Premises
Delivery Date, Sublessee shall notify Sublessor of the need for correction or
repair, and Sublessor shall cause the correction or repair to be completed at
no cost to Sublessee. Notwithstanding anything to the contrary contained in the
foregoing, if the need for correction or repair was caused by the act or
omission of Sublessee, its agents, employees or contractors on the Subleased
Premises, Sublessee, and not Sublessor, shall be responsible for the correction
or repair.


 


B. No Defects. The Subleased Premises
(including without limitation the window systems, roof, roof membrane and
structural elements), tenant improvements installed by Sublessor, and all
systems located within or serving the Subleased Premises (including without
limitation the plumbing, lighting, gas, electrical, HVAC distribution and fire
safety (each individually referred to as a “Building Systems)), are water-tight
and in good working condition and repair. If at any time during the ninety
(90) day period immediately following Sublessee’s receipt of comments from
the City to Sublessee’s plans for the Sublessee Improvements (the “Warranty
Period”), Sublessee discovers that the roof membrane, roof structure, window
systems or the electrical, gas, plumbing, lighting or HVAC distribution systems
serving the Subleased Premises are not in the condition required by the
foregoing sentence, Sublessee shall notify Sublessor of the need for correction
or repair, and Sublessor shall cause the correction or repair to be completed
at no cost to Sublessee; provided, however, if during the Warranty Period
Sublessee (i) commences demolition in preparation for and/or construction
that modifies a particular Building System, then the Warranty Period with
regard to that Building System shall cease as of the date that Sublessee
commences such demolition and/or construction, or (ii) makes a roof
penetration at the Sublease Premises, then the Warranty Period with regard to
the roof and roof membrane shall cease as of the date of such penetration. If
during the first ninety (90) days after Sublessee occupies the Subleased
Premises for purposes of conducting business Sublessee discovers that the
generator, plumbing (or other) fixtures or HVAC units are not in the condition
required by this Paragraph, Sublessee shall notify Sublessor of the need for
correction or repair, and Sublessor shall cause the correction or repair to be
completed at no cost to Sublessee. If Sublessor delivers to Sublessee the
elevators and the maintenance and certification documentation required with
respect thereto, and prior to the date that Sublessee commences demolition in
preparation for and/or construction of the Sublessee Improvements, Sublessee
discovers that the elevators are not in the condition required by this
Paragraph, Sublessee shall notify Sublessor of the need for correction or
repair, and Sublessor shall cause the correction or repair to be completed at
no cost to Sublessee. Notwithstanding anything to the contrary contained in the
foregoing, if the need for correction or repair was caused by the act or
omission of Sublessee, its agents, employees or contractors on the Subleased
Premises, including, without limitation, modifications to or penetration of the
roof membrane, Sublessee, and not Sublessor, shall be responsible for the
correction or repair.


 


Other than as provided in Paragraphs 7.A and B above
and Paragraph 35 below, Sublessor shall deliver the Subleased Premises to
Sublessee broom clean and with all personal effects removed, but otherwise in
its “as-is, with all faults” condition, and Sublessor shall have no obligation
whatsoever to make or pay the cost of any alterations, improvements or repairs
to the Subleased Premises, including, without limitation, any improvement or
repair required to comply with any Applicable Laws. Sublessee shall not look to
Sublessor for performance of any repairs required to be performed by Master Lessor
under the terms of the Master Lease, provided, however, that any cost that
might otherwise be “passed through” to Sublessee pursuant to Section 6.01(b) or
6.02 of the Master Lease with respect only to the matters warranted in
Paragraphs 7.A. and 7.B. above as a result of such repairs shall be borne by
Sublessor rather than Sublessee, except to the extent the need for repair was
caused by the act of omission of Sublessee, its agents, employees or
contractors on the Subleased Premises.


 


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Other than as provided in Paragraphs 7.A and B
above, from and after the Premises Delivery Date, Sublessee shall, at
Sublessee’s cost and expense, comply promptly with all Applicable Laws relating
to the Subleased Premises and Sublessee’s use and occupancy of the same in
effect during any part of the Term, whether such requirements are presently
foreseeable or not, and without regard to the cost or expense of compliance.


 


8. Indemnification.


 


A. Indemnification of Master Lessor. Pursuant
to this Sublease, for the benefit of Master Lessor, Sublessee assumes all of
Sublessor’s indemnification obligations as “Lessee” under the Master Lease,
including, without limitation, Sections 7.07 and 17.22(d), arising from and
after the Delivery Date or related to the actions or omissions of Sublessee or
its agents, employees, licensees, invitees, contractors, vendors, guests,
visitors, sublessees or assigns (collectively, “Agents”), subject to and in
accordance with the terms, conditions, exceptions and defenses set forth in the
Master Lease, and except for any liability, damage or injury arising because of
the negligence or willful misconduct of Sublessor or its Agents.


 


B. Indemnification of Sublessor. Except to
the extent caused by the active negligence or willful misconduct of Sublessor
or its Agents, Sublessee shall indemnify and hold harmless Sublessor from any
and all liability, claims, loss, damages, causes of action (whether in tort or
contract, law or equity, or otherwise), expenses, charges, assessments, fines
and penalties of any kind, including, without limitation, reasonable attorney
fees, expert witness fees and costs, arising by reason of (i) the death or
injury of any person, including any person who is an employee, agent, invitee,
licensee, permittee, visitor, guest or contractor of Sublessee, or by reason of
damage to or destruction of any property, including property owned by Sublessee
or any person who is an employee, agent, invitee, licensee, permittee, visitor,
guest or contractor of Sublessee, caused or allegedly caused (1) while
that person or property is in or about the Subleased Premises; (2) by some
condition of the Subleased Premises; (3) by some act or omission by
Sublessee or its Agents, or any person in, adjacent, on, or about the Subleased
Premises with the permission, consent or sufferance of Sublessee; (4) by
any matter connected to or arising out of Sublessee’s occupation and use of the
Subleased Premises (ii) the negligence or willful misconduct of Sublessee
or its Agents; or (iii) a breach of Sublessee’s obligations,
representations or warranties under this Sublease; or (iv) a breach of
Sublessee’s obligations under the Master Lease to the extent incorporated
herein pursuant to Paragraph 24. In addition, Sublessee shall indemnify and
hold Sublessor harmless from any liabilities, losses, claims, damages,
penalties, fines, attorney fees, expert fees, court costs, remediation costs,
investigation costs, or other expenses resulting from or arising out of the use,
storage, treatment, transportation, release, presence, generation or disposal
of Hazardous Materials (defined in Section 17.22 of the Master Lease) on,
from or about the Subleased Premises, and/or the subsurface or ground water,
after the Premises Delivery Date from an act or omission of Sublessee or any of
Sublessee’s Agents. If by reason of an act or omission of Sublessee or any of
its employees, agents, invitees, licensees, visitors, guests or contractors,
Sublessor is made a party defendant or a cross-defendant to any action
involving the Subleased Premises or this Sublease, Sublessee shall hold
harmless and indemnify Sublessor from all liability or claims of liability,
including all damages, attorney fees and costs of suit.


 


C. Indemnification of Sublessee. Sublessor
shall indemnify and hold harmless Sublessee from any liabilities, losses,
claims, damages, penalties, fines, attorney fees, expert fees, court costs,
remediation costs, investigation costs, or other expenses resulting from or
arising out of the use, storage, treatment, transportation, release, presence,
generation or disposal of Hazardous Materials on, from or about the Subleased
Premises, and/or the subsurface or ground water, prior to the Premises Delivery
Date, from an act or omission of Sublessor or its agents or employees. To the
extent that Sublessor is indemnified by Master Lessor pursuant to Section 17.22(d) of
the Master Lease, Sublessee shall have no liability with respect to such
matters.


 


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D. Consequential Damages. Notwithstanding any
other provision of this Sublease, in no event shall Sublessor or Sublessee be
liable to the other (i) for lost profits or any special, indirect,
incidental, punitive or consequential damages arising from any cause (except,
in the case of an indemnity obligation, to the extent the indemnified party is
obligated to pay such damages to Master Lessor under the Master Lease as a
result of a default by the indemnifying party under this Sublease or the Master
Lease), or (ii) for any damage which is or could be covered by the
insurance required to be carried under this Sublease.


 


E. Survival. The foregoing indemnifications
and those contained in the Master Lease incorporated by reference herein shall
survive the expiration or earlier termination of this Sublease.


 


9. Right to Cure Defaults:


 


A. Sublessee’s Defaults. If Sublessee fails
to pay any sum of money due to Sublessor within two (2) business days’
following written notice to Sublessee, or fails to perform any other act on its
part to be performed hereunder within five (5) business days’ following
written notice to Sublessee, then Sublessor may, but shall not be obligated to,
make such payment or perform such act. All such sums paid, and all costs and
expenses of performing any such act, shall be deemed Sublease Additional Rent
payable by Sublessee to Sublessor upon demand, together with interest thereon
at the Agreed Rate as described in Section 17.02 of the Master Lease, from
the date of the expenditure until repaid.


 


B. Sublessee’s Authorization to Direct Sublease
Payments. In addition to Sublessee’s rights pursuant to Paragraph 41 below,
Sublessee shall have the right to pay all Rent owing by Sublessee to Sublessor
under this Sublease for those items which also are owed by Sublessor to Master
Lessor under the Master Lease directly to Master Lessor on the following terms
and conditions:


 


(i) Either (i) Sublessee reasonably
believes that Sublessor has failed to make any payment required to be made by
Sublessor to Master Lessor under the Master Lease and Sublessor fails to
provide adequate proof of payment within two (2) business days after
Sublessee’s written demand requesting such proof; or (ii) Sublessee
reasonably believes that Sublessor shall fail to make any payment required to
be made by Sublessor to Master Lessor under the Master Lease and Sublessor
fails to provide assurance of future performance in form reasonably
satisfactory to Sublessee within two (2) business days after Sublessee’s
written demand requesting such assurance; or (iii) Sublessee has received
a Master Lessor Base Rent Demand as defined in Section 41.A.(2) below.


 


(ii) Sublessee shall not prepay any amounts
owing by Sublessee without the consent of Sublessor.


 


(iii) Sublessee shall provide to Sublessor
concurrently with any payment to Master Lessor reasonable evidence of such
payment.


 


(iv) Notwithstanding section (i) above, if
Sublessor notifies Sublessee that it disputes any amount demanded by Master
Lessor, Sublessee shall not make any such payment to Master Lessor unless
Master Lessor has provided a three-day notice to pay such amount or forfeit the
Master Lease or Master Lessor has provided a Master Lessor Base Rent Demand.


 


8

















 


Any
sums paid directly by Sublessee to Master Lessor in accordance with this
Paragraph 9 (rather than pursuant to the provisions of Paragraph 41 below)
shall be credited toward the amounts payable by Sublessee to Sublessor under
this Sublease, and Sublessee agrees that upon the credit by Sublessor of such
amounts against the amounts payable by Sublessee to Sublessor pursuant to this
Sublease, Sublessor shall be forever released from all obligations and
liabilities under this Sublease relating to Sublessor’s obligation to pay such
particular amounts due under the Master Lease.


 


10. Assignment and Subletting:


 


A. In General. Sublessee shall not
voluntarily or by operation of law assign, transfer, mortgage, sublet, license
or otherwise transfer or encumber all or any part of Sublessee’s interest in
this Sublease or the Subleased Premises or any part thereof (“Transfer”)
without the prior written consent of Sublessor, which shall not be unreasonably
withheld or delayed, and of Master Lessor to any proposed Transfer, and any
such Transfer shall be made in accordance with the provisions of Article 11
of the Master Lease or Paragraph 10.C. below. A consent to one Transfer shall
not be deemed to be a consent to any subsequent Transfer. Any Transfer without
the consents required by this Paragraph shall be void and shall constitute a
breach of this Sublease. Sublessor’s consent to any assignment or subletting
shall be ineffective unless set forth in writing, and Sublessee shall not be
relieved from any of its obligations under this Sublease, unless the consent
expressly so provides.


 


B. Excess Rent. In the event Sublessor shall
consent to a Transfer, and after any excess rent has been paid to Master Lessor
pursuant to Section 11.04 of the Master Lease, Sublessee shall pay to
Sublessor with its regularly scheduled Monthly Base Rent payments, fifty
percent (50%) of all sums and the fair market value of all consideration
collected or received by Sublessee from a sub-sublessee or assignee which are
in excess of the Monthly Base Rent and Sublease Additional Rent due and payable
with respect to the subleased or assigned Subleased Premises for the time
period encompassed by the Transfer term, after first deducting: (i) leasing
commissions, and (ii) the unamortized cost (based on a straight-line
amortization over the entire Sublease Term) of Sublessee Improvements paid for
by Sublessee and allocable to such subleased or assigned Subleased Premises
(based on the rentable square footage of the space assigned or sublet compared
to the Subleased Premises).


 


C. Sublessee Affiliates. Sublessee may assign
this Sublease, or sublet up to forty percent (40%) of the Sublease
Premises, without the need for Sublessor’s consent (but with written notice to
Sublessor prior to such transfer, unless such notification is restricted by the
regulations or requirements of the Securities and Exchange Commission, in which
event such notification shall be made promptly following the date of such
transfer), to any corporation, limited liability company or partnership which
controls, is controlled by, or is under common control with Sublessee, or to
any corporation, limited liability company or partnership resulting from the
merger or consolidation with Sublessee, or to any person or entity which
acquires all of Sublessee’s stock or all, or substantially all of the assets of
Sublessee as a going concern of the business that is being conducted on the
Sublease Premises (collectively, an “Affiliate”), provided that said assignee
or sublessee (i) in the event of an assignment of this Sublease to an
Affiliate only, has a net worth at least equal to the net worth of Sublessee as
of the date of this Sublease, and (ii) assumes, in full, the obligations
of Sublessee under this Sublease (or, in the case of a sublease, the portion of
the Sublease Premises subject to the sublease) and provided further that the
use to which the Sublease Premises will be put does not materially change. Any
such assignment shall not, in any way, affect or limit the liability of
Sublessee under the terms of this Sublease. The terms of Paragraph 10.B. above
shall not be applicable to any assignment or sublease pursuant to this
Paragraph. The foregoing shall not be deemed to relieve Sublessee’s obligation
to obtain Master Lessor’s consent to an assignment or sublease to an Affiliate
under the Master Lease, to the extent Master Lessor’s consent is required.


 


9

















 


11. Use: Sublessee shall use the Subleased
Premises only for office, research and development and such ancillary uses
which do not cause excessive wear of the Subleased Premises or increase the
potential liability of Sublessor, and, except as otherwise expressly permitted
in this Sublease, in accordance with the provisions of Section 5.01 of the
Master Lease. Notwithstanding the foregoing sentence, at Sublessee’s option
(written notice of which election shall be given to Sublessor at least sixty
(60) days prior to commencement of such use), and subject to the terms of
the Master Lessor’s Consent (which shall include Master Lessor’s consent to the
following), the Subleased Premises also may be used and occupied for
laboratory, biopharmaceutical research (including without limitation, vivarium
and animal colony facilities for rodents only, small scale pilot fermentation
and other pilot plant facilities) and other related legal uses (collectively,
“Lab Uses”). Sublessee shall use the Subleased Premises for no uses other than
those set forth in the foregoing two sentences without Sublessor’s prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed so long as such use is lawful and does not conflict with any other
provision of this Sublease, and the prior written consent of Master Lessor.
Upon demand, Sublessee shall pay to Sublessor all taxes or charges imposed by
applicable governmental authorities against the Subleased Premises or
Sublessor, so long as such tax or assessment is directly related to Sublessor’s
interest in the Subleased Premises (including, without limitation, assessments
imposed as a consequence of the occurrence, storage, use or disposal of
Hazardous Materials [as defined in Section 17.22(a) of the Master
Lease] by Sublessee or Sublessee’s Agents in or about the Subleased Premises).
Sublessee shall not do or permit anything to be done in or about the Subleased
Premises which would (i) injure the Subleased Premises, or (ii) vibrate,
shake, overload, or impair the efficient operation of the Subleased Premises or
the sprinkler systems, heating ventilating or air conditioning equipment, or
utilities systems located therein. Sublessee shall not store any materials,
supplies, finished or unfinished products, or articles of any nature outside of
the Subleased Premises, except with the prior written consent of Master Lessor.
Sublessee shall comply with all reasonable rules and regulations
promulgated from time to time by Master Lessor.


 


12. Effect of Conveyance by Sublessor: As
used in this Sublease, the term “Sublessor” means the holder of the lessee’s
interest under the Master Lease, together with any of such lessee’s successors
and assigns. In the event of any transfer of said lessee’s interest, Sublessor
shall not be relieved of any covenants or obligations of the Sublessor
hereunder. From and after the effective date of the transfer, it shall be
deemed and construed, without further agreement between the parties, that the
transferee has assumed and shall be jointly and severally liable with the
original lessee for the performance of all of covenants and obligations to be
performed by Sublessor hereunder. However, if Sublessor shall transfer and
deliver any security of Sublessee to the transferee of said lessee’s interest
in the Master Lease, and thereupon the Sublessor shall be discharged from any
further liability with respect thereto. Notwithstanding anything to the
contrary contained in this Paragraph, no transfer of Sublessor’s interest in
the Subleased Premises shall affect the terms and conditions of this Sublease.


 


13. Acceptance: The parties acknowledge and
agree that Sublessee is subleasing the Subleased Premises on an “as is, with
all faults” basis and Sublessor has made no representations or warranties with
respect to the condition of the Subleased Premises except as set forth in
Paragraph 7 above. Sublessee hereby represents to Sublessor and Master Lessor
that (i) Sublessee has fully inspected the Subleased Premises and the
physical condition thereof, including, without limitation, accessibility and
location of utilities and improvements, zoning and earthquake preparedness,
which in Sublessee’s judgment affect or influence Sublessee’s use of the
Subleased Premises and Sublessee’s willingness to enter into this Sublease, (ii) Sublessee
is relying on its inspection in subleasing the Subleased Premises, and (iii) Sublessee
has received no representations or warranties from Sublessor, other than with
respect to the condition of the Premises (as set forth in Paragraph 7 above),
or from Master Lessor on which Sublessee has relied in entering into this
Sublease.


 


10














 


14. Improvements:


 


A. Alterations and Improvements. No
alterations or improvements shall be made to the Subleased Premises except in
strict accordance with this Sublease and Sections 6.03 and 6.04 of the Master
Lease, and only with the prior written consent of both Master Lessor and
Sublessor, which consent of Sublessor shall not be unreasonably withheld,
conditioned or delayed; provided, however, that for any “de minimis”
alterations that do not require Master Lessor’s consent under Section 6.03
of the Master Lease, Sublessee shall not be required to obtain the consent of
either Master Lessor or Sublessor.


 


B. Sublessee Improvements. Sublessee may, at
its option and in strict accordance with the provisions of the Master Lease,
including, without limitation, Sections 6.03 and 6.04 thereof, and this
Sublease, complete certain sublessee improvements to prepare the Subleased
Premises for Sublessee’s occupancy thereof, consisting, conceptually, of the
following: modifications to the existing data center, demolition of certain
network labs, possible modifications to the existing executive suites and
modifications to the shipping and receiving area (the “Sublessee
Improvements”). The Sublessee Improvements shall be constructed at Sublessee’s
sole cost and expense, without any contribution or improvement allowance from
Sublessor. Sublessee shall not make or permit anyone to make any Sublessee
Improvements without the prior written consent of Sublessor, which shall not be
unreasonably withheld, conditioned or delayed, and of Master Lessor in
accordance with the Master Lease. In connection with the foregoing, Sublessee
shall submit to Sublessor, for prior written approval by Sublessor, which shall
not be unreasonably withheld, conditioned or delayed, and Master Lessor, any
and all space plans, preliminary plans, design development drawings and
construction documents required by Master Lessor to be provided in connection
with the Sublessee Improvements. Any and all costs and expenses associated with
the acquisition of cabling, equipment, furniture, security systems or other
personal property for Sublessee or the Subleased Premises or the installation
or placement of any of the foregoing within the Subleased Premises or with the
project management for the performance of the Sublessee Improvements
(collectively, “Sublessee’s Personal Property and Services”), also shall be
paid for by and be the sole responsibility of Sublessee, except to the extent
included as part of the Personal Property described in Paragraph 35 below.


 


C. Removal of Improvements. Upon the
expiration or earlier termination of this Sublease, or at such later time if so
permitted by the Future Lease, Sublessee, at its sole cost and expense, shall
be responsible for removing any and all alterations or improvements (including,
without limitation, the Sublessee Improvements) installed in the Subleased
Premises by Sublessee and restoring the Subleased Premises to its condition
immediately prior to the alteration or improvement, but only if and to the
extent required by Master Lessor. If this Sublease is terminated as a result of
a default, beyond applicable notice and cure periods, by Sublessee under this
Sublease or under the Master Lease (to the extent incorporated herein),
Sublessee shall be required to remove the alterations or improvements
(including, without limitation, the Sublessee Improvements) and restore the
Subleased Premises if and to the extent required by Master Lessor.


 


11

















 


15. Insurance; Waiver of Subrogation and Release:


 


A. Insurance. All insurance policies required
to be carried by “Lessee” under Article VII of the Master Lease shall be
maintained by Sublessee pursuant to the terms of Article VII, commencing
on the Premises Delivery Date and continuing until the expiration or earlier
termination of the Term. Such policies shall name Sublessor and Master Lessor
(and such lenders as are designated by Sublessor or Master Lessor) as
additional insureds. All policies shall be written as primary policies with
respect to the interests of Master Lessor and Sublessor and such other
additional insureds, and shall be primary to and not contributory with any
similar insurance carried by Master Lessor, which insurance shall be considered
excess insurance. All policies shall also contain “cross liability” or
“severability of interest” provisions and shall insure the performance of the
indemnity obligations set forth in this Sublease. Sublessee shall provide
Master Lessor and Sublessor with certificates of all policies, including in
each instance an endorsement providing that such insurance shall not be
cancelled or amended except after thirty (30) days prior written notice to
Master Lessor and Sublessor. Sublessor shall not be obligated to deliver the
Subleased Premises to Sublessee until Sublessee has provided to Sublessor the
certificates of insurance required by Section 7.05 of the Master Lease.
The limits of said insurance required by this Sublease as carried by Sublessee
shall not limit the liability of Sublessee nor relieve Sublessee of any
obligation hereunder.


 


B. Master Lessor’s Insurance. Sublessee shall
pay, as Sublease Additional Rent, any deductible for insurance carried by
Master Lessor pursuant to, and subject to the conditions stated in, Article VII
of the Master Lease.


 


C. Mutual Waiver of Subrogation. Sublessor
and Sublessee hereby release and relieve the other, and waive their entire
claim of recovery for loss or damage to property arising out of or incident to
fire, lightning, and the other perils included in a standard “all risk”
insurance policy of a type described in Sections 7.01 and 7.02 of the Master
Lease that is carried by the waiving party (or that would have been if the
waiving party had carried the insurance required hereunder), when such property
constitutes the Subleased Premises or the Project, or is in, on or about the
Subleased Premises, whether or not such loss or damage is due to the negligence
of Sublessor or Sublessee, or their respective agents, employees, guests,
licensees, invitees, or contractors. Sublessee and Sublessor waive all rights
of subrogation against each other on behalf of, and shall obtain a waiver of
all subrogation rights from, all property and casualty insurers referenced
above.


 


D. Releases. Except as expressly set forth in
this Sublease, Sublessor shall not be liable to Sublessee, nor shall Sublessee
be entitled to terminate this Sublease or to abate Rent, for any reason,
including, without limitation: (i) failure or interruption of any utility
system or service; or (ii) failure of Master Lessor to maintain the
Subleased Premises as may be required under the Master Lease, subject to
Paragraph 16.C below. Sublessee hereby waives all claims against Sublessor for
damages to good, wares and merchandise and all other personal property in, on
or about the Subleased Premises and for injury or death to persons in, on or
about the Subleased Premises from any cause arising at any time to the fullest
extent permitted by law. Sublessor and Sublessee are corporations or other
business entities, and the obligations of Sublessor and Sublessee shall not
constitute the personal obligations of the officers, directors, trustees,
partners, joint venturers, members, owners, stockholders or other principals or
representatives of such corporation or business entity.


 


12

















 


16. Damage and Destruction; Condemnation.


 


A. Rights of Termination. To the that the
Master Lease gives Sublessor any rights following the occurrence of any damage,
destruction or condemnation to terminate the Master Lease, to obtain and
utilize insurance or condemnation proceeds to repair or restore the Sublease
Premises, or any similar rights, such rights shall be reserved to and
exercisable solely by Sublessee, and not by Sublessor; provided, however, that
Sublessee shall be entitled to exercise such rights only with the prior written
consent of Sublessor, which consent shall not be unreasonably withheld,
conditioned or delayed.


 


B. Waiver of Statutory Rights. Except as expressly
set forth herein, Sublessee shall have no right to terminate this Sublease as a
result of any casualty or condemnation, and Sublessee hereby waives any
provision of law that provides for such right of termination.


 


C. Rent Abatement. Notwithstanding anything
in this Sublease to the contrary, to the extent that Rent is abated for
Sublessor with respect to the Subleased Premises pursuant to the terms of the
Master Lease, Sublessee’s Rent obligations with respect to the Subleased
Premises also shall be abated.


 


17. Default and Remedies.


 


A. Default: Sublessee’s performance of each
of its obligations under this Sublease constitutes a condition as well as a
covenant, and Sublessee’s right to continue in possession of the Subleased
Premises is conditioned upon such performance. In addition, Sublessee shall be
in material default of its obligations under this Sublease if Sublessee
commits, or is responsible for the occurrence of, any of the events of default
set forth in Section 12.01 of the Master Lease.


 


B. Remedies: In the event of any default by
Sublessee under this Sublease (including, without limitation, a default
pursuant to Section 12.01 of the Master Lease), Sublessor shall have all
remedies provided by applicable law and in equity, including, without
limitation, all rights pursuant to Article 12 of the Master Lease.
Sublessor may resort to its remedies cumulatively or in the alternative.


 


18. Surrender:


 


A. In General. Unless otherwise provided
pursuant to the Future Lease, on or before the Expiration Date or earlier
termination of this Sublease, Sublessee shall remove all of its trade fixtures
and all alterations and improvements, including, without limitation the
Sublessee Improvements if removal is required by Master Lessor, and shall
surrender the Subleased Premises to Sublessor in the condition required by Section 17.09(a) of
the Master Lease, free of Hazardous Materials stored, used or disposed of by
Sublessee. If the Subleased Premises are not surrendered if and as required
hereby, then Sublessee shall be liable to Sublessor for all costs incurred by
Sublessor in returning the Subleased Premises to the required condition, plus
interest thereon at the Agreed Rate. Sublessee shall indemnify, defend, protect
and hold harmless Sublessor and Master Lessor against any and all claims,
liabilities, judgments, causes of action, damages, costs, and expenses
(including attorneys’, consultants’ and experts’ fees) resulting from
Sublessee’s delay in surrendering the Subleased Premises, including, without
limitation, any claim made by any succeeding tenant founded on or resulting
from such failure to surrender. The indemnification set forth in this Paragraph
shall survive the expiration or earlier termination of this Sublease. In no
event shall Sublessee be required to remove any alterations or improvements
which were not installed by or on behalf of Sublessee.


 


13

















 


B. Change in Use of Subleased Premises. If
Sublessee elects to use the Subleased Premises for one or more of the Lab Uses,
Sublessee shall comply with the provisions of this Section 18.B.;
provided, however, that if Sublessee continues to occupy the Subleased Premises
pursuant to the Future Lease following the expiration or earlier termination of
this Sublease, then the provisions of this Section 18.B. shall not apply.


 


(i) Governmental Clearances. At the
expiration or earlier termination of this Sublease, Sublessee shall vacate,
deliver up and surrender to Sublessor possession of the Subleased Premises and
all improvements thereon, subject to the terms of this Sublease concerning
Hazardous Materials brought upon, kept, used, stored, handled, treated,
generated in, or released or disposed of from the Subleased Premises by
Sublessee or any of Sublessee’s agents, employees or contractors (collectively,
“Sublessee HazMat Operations”), and released of all clearances required by any
governmental authorities with respect to Sublessee HazMat Operations.


 


(ii) Closure Requirements. At least
three (3) months prior to the surrender of the Subleased Premises,
Sublessee shall deliver to Sublessor a narrative description of the actions
proposed (or required by any governmental authority) to be taken by Sublessee
in order to surrender the Subleased Premises (including any Alterations
permitted by Master Lessor to remain in the Subleased Premises) at the
expiration or earlier termination of the Sublease Term, in accordance with the
requirements of any Environmental Laws or relevant governmental authority or,
in the absence thereof, the commercially reasonable requirements of Master
Lessor’s lender or any commercially reasonable requirements of Sublessor’s
environmental consultant (collectively, “HazMat Requirements”) with respect to
the Sublessee HazMat Operations and otherwise released for unrestricted use and
occupancy (the “Surrender Plan”). Such Surrender Plan shall be accompanied by a
current listing of (i) all Hazardous Materials licenses and permits held
by or on behalf of Sublessee or any of its agents, employees or contractors
(collectively, the “Sublessee Parties”) with respect to the Subleased Premises,
and (ii) all Hazardous Materials used, stored, handled, treated,
generated, released or disposed of from the Subleased Premises, and shall be
subject to the review and approval of Sublessor’s environmental consultant. In
connection with the review and approval of the Surrender Plan, upon the request
of Sublessor, Sublessee shall deliver to Sublessor or its consultant such
additional non-proprietary information concerning Sublessee HazMat Operations
as Sublessor shall request. On or before such surrender, Sublessee shall
deliver to Sublessor evidence that the approved Surrender Plan shall have been
satisfactorily completed and all HazMat Requirements have been met, and Sublessor
shall have the right, subject to reimbursement at Sublessee’s expenses as set
forth below, to cause Sublessor’s environmental consultant to inspect the
Subleased Premises and perform such additional procedures as may be deemed
reasonably necessary to confirm that the Subleased Premises are, as of the
effective date of such surrender or early termination of this Sublease, in
accordance with applicable HazMat Requirements. Sublessee shall reimburse
Sublessor, as Sublease Additional Rent, for the actual, out-of-pocket expense
incurred by Sublessor for Sublessor’s environmental consultant to review and
approve the Surrender Plan and to visit the Subleased Premises and verify
satisfactory completion of the same. Sublessor shall have the unrestricted right
to deliver such Surrender Plan and any report by Sublessor’s environmental
consultant with respect to the surrender of the Subleased Premises to third
parties. If Sublessee shall fail to prepare or submit a Surrender Plan approved
by Sublessor, or if Sublessee shall fail to complete the approved Surrender
Plan, or if such Surrender Plan, whether or not approved by Sublessor, shall
fail to adequately address any residual effect of Sublessee HazMat Operations
in, on or about the Subleased Premises in violation of HazMat Requirements,
Sublessor shall have the right to take such actions as Sublessor may deem
reasonable or appropriate to assure that the Subleased Premises and the Project
are surrendered free from any residual impact from Sublessee HazMat Operations,
the cost of which actions shall be reimbursed by Sublessee as Sublease
Additional Rent. Sublessee’s obligations pursuant to this Paragraph 18.B. shall
survive the expiration or earlier termination of this Sublease.


 


14

















 


19. Brokers: Sublessor and Sublessee each
represent to the other that they have dealt with no real estate brokers,
finders, agents or salesmen in connection with this transaction, except Cresa
Partners, representing Sublessor, and Cornish & Carey Commercial, Inc.,
representing Sublessee (“Brokers”). Each party agrees to hold the other party
harmless from and against all claims for brokerage commissions, finder’s fees,
or other compensation made by any other agent, broker, salesman or finder as a
consequence of said party’s actions or dealings with such agent, broker,
salesman, or finder. Sublessor shall be responsible for payment of any
brokerage commission due to the Brokers in connection with this Sublease
pursuant to the terms of a separate agreement between Sublessor and Cresa
Partners.


 


20. Notices:


 


A. Notice Requirements. Unless five (5) days’
prior written notice is given in the manner set forth in this Paragraph, the
addresses of Sublessor and Sublessee for all purposes connected with this
Sublease shall be the addresses set forth below their respective signatures.
All notices, demands, or communications in connection with this Sublease shall
be considered received when (i) personally delivered, or (ii) if
properly addressed and either sent by nationally recognized overnight courier
or deposited in the mail (registered or certified, return receipt requested,
and postage prepaid), on the date shown on the return receipt or other
documentation for acceptance or rejection. All notices given to the Master
Lessor under the Master Lease shall be considered received only when delivered
in accordance with Section 17.06 of the Master Lease and when sent to
Master Lessor at the following address: Pacific Shores Investors, LLC, c/o Jay
Paul Company, 350 California Street, Suite 1905, San Francisco, California
94111.


 


B. Notices from or to Master Lessor. Each
party shall provide to the other party a copy of any notice or demand received
from or delivered to Master Lessor within three (3) business days of
receiving or delivering such notice or demand, where such notice or demand
materially relates to or affects the rights and/or obligations of the parties
under this Sublease.


 


21. Severability: If any term of this
Sublease is held to be invalid or unenforceable by any court of competent
jurisdiction, then the remainder of this Sublease shall remain in full force
and effect to the fullest extent possible under the law, and shall not be
affected or impaired.


 


22. Amendment: This Sublease may not be amended
except by the written agreement of all parties hereto.


 


23. Attorneys’ Fees: If either Sublessor or
Sublessee shall bring any action or legal proceeding to enforce, protect or
establish any term or covenant of this Sublease, the prevailing party shall be
entitled to recover its reasonable attorneys’ fees, consultants’ costs, court
costs and experts’ fees as may be fixed by the court. “Prevailing party” as
used in this Sublease includes a party who dismisses an action for recovery
hereunder in exchange for sums allegedly due, performance of covenants
allegedly breached or consideration substantially equal to the relief sought in
the action.


 


24. Other Sublease Terms:


 


A. Incorporation By Reference. Except as
otherwise provided in or contradicted by this Sublease, the terms and
conditions of this Sublease shall include the specific Sections of the Master
Lease listed in Paragraph 24.B, which are incorporated into this Sublease as if
fully set forth, except that: (i) each reference in such incorporated
Sections to “Lease” shall be deemed a reference to “Sublease”; (ii) each
reference to the “Premises” shall be deemed a reference to the “Subleased
Premises”; (iii) each reference to


 


15

















 


“Lessor”
and “Lessee” shall be deemed a reference to “Sublessor” and “Sublessee”,
respectively, except as expressly set forth herein; (iv) with respect to
work, services, repairs, restoration, provision of insurance or the performance
of any other obligation of Master Lessor under the Master Lease, the sole
obligation of Sublessor shall be to request the same in writing from Master
Lessor as and when requested to do so by Sublessee, and to use Sublessor’s
commercially reasonable good faith efforts (without requiring Sublessor to spend
more than a nominal sum and otherwise at Sublessee’s sole cost and expense) to
obtain the Master Lessor’s performance; (v) with respect to any obligation
of Sublessee to be performed under this Sublease, wherever the Master Lease
grants to Sublessor a specified number of days to perform its obligations under
the Lease, Sublessee shall have two (2) fewer days to perform the
obligation, including, without limitation, curing any defaults (provided,
however, that if any cure period provides for three (3) days or fewer to
perform, Sublessee shall have two (2) business days to perform); (vi) Sublessor
shall have no liability to Sublessee with respect to (a) representations
and warranties made by Master Lessor under the Master Lease, (b) any
indemnification obligations of Master Lessor under the Master Lease, or other
obligations or liabilities of Master Lessor under the Master Lease with respect
to compliance with laws, condition of the Premises or Hazardous Materials, and (c) obligations
under the Master Lease to repair, maintain, restore, or insure all or any
portion of the Premises, regardless of whether the incorporation of one or more
provisions of the Master Lease might otherwise operate to make Sublessor liable
therefor; and (vii) with respect to any approval required to be obtained
from the “Lessor” under the Master Lease, such consent must be obtained from
both the Master Lessor and the Sublessor, but Sublessor’s consent shall not be
unreasonably withheld, conditioned or delayed (except that the approval of
Sublessor shall be conditioned upon receipt of the Master Lessor’s consent).  Notwithstanding the foregoing, references
to “Lessor” in the following provisions of the Master Lease shall mean Master
Lessor, not Sublessor: Section 2.02, the first sentence of Section 5.06,
Section 6.01(b), Section 6.02, the second, third, sixth and seventh
sentences of Section 6.03, Section 6.05, Section 7.01, Section 7.03,
Section 8.01, Article 13, Section 16.01, Section 17.13, Section 17.19,
the last sentence of Section 17.22(d) and Section 17.23.


 


B. Incorporated Provisions. The following
paragraphs of the Master Lease are hereby incorporated into this Sublease,
except to the extent expressly contradicted by the provisions of this Sublease:
Section 2.02; Section 2.03; Section 5.01; Section 5.02(c); Section 5.03,
except for the first sentence; Section 5.05, except as provided in Section 35(ii) of
this Sublease; Section 5.06, provided that Sublessee shall be bound by all
rules and regulations to the same extent that Sublessor is bound; Article 6;
Sections 7.01 through 7.05; Article 8; Article 9; Article 10; Section 11.01,
Section 11.03, Section 11.05; Article 12; Article 13;
Article 14 (excluding subsection (ii) thereof), except that in
exercising any right of entry, Sublessor shall comply with Sublessee’s
reasonable security measures and operating procedures and shall minimize any
disruption to Sublessee; Article 15; Article 16; Section 17.01; Section 17.02;
Section 17.03; Section 17.05, except that the reference to exhibits therein
shall mean and refer only to the exhibits to this Sublease; Section 17.06;
Section 17.07; Section 17.09(a), except that this Section shall
not apply if Sublessee continues in occupancy past the expiration of the Term
pursuant to the Future Lease; Section 17.10; Section 17.11; Section 17.12,
excluding the reference to Article 16; Section 17.13 (excluding the
last sentence); Section 17.16; Section 17.18; Section 17.19; Section 17.20;
Section 17.21; Section 17.22, except that in Section 17.22(c),
Sublessor shall not withhold approval of any Hazardous Materials use that is
approved by Master Lessor, and Sublessee shall not be required to remove
Hazardous Materials at the end of the Term if Sublessee continues in occupancy
pursuant to the Future Lease; Section 17.23; Section 17.26; and
Exhibits A, I, J, K, L and M.


 


C. Assumption of Obligations: This Sublease
is and at all times shall be subject and subordinate to the Master Lease and
the rights of Master Lessor thereunder, provided, however, that in the event of
a conflict between the provisions of this Sublease and the provisions of the
Master Lease, as between Sublessor and Sublessee, the provisions of this
Sublease shall control. Sublessee hereby expressly assumes and agrees: (i) to
comply with all provisions of the Master Lease with respect to the Subleased
Premises


 


16

















 


during
the Term to the extent incorporated herein or as otherwise expressly provided
by this Sublease; (ii) to perform all the obligations on the part of the
“Lessee” to be performed under the terms of the Master Lease with respect to
the Subleased Premises during the Term to the extent incorporated herein or as
otherwise expressly provided by this Sublease; and (iii) not to act or
omit to act in any manner which would violate any provision of the Master
Lease.


 


D. Performance by Sublessor. Sublessor shall
not be required to furnish, supply or install anything required of Master
Lessor under any Article of the Master Lease. Sublessor shall have no
liability or responsibility whatsoever for Master Lessor’s failure or refusal
to perform under the Master Lease. Sublessor’s obligation to use its
commercially reasonable good faith efforts to cause Master Lessor to observe
and perform its obligations under the Master Lease shall not be a guarantee by
Sublessor of Master Lessor’s compliance with the provisions of the Master
Lease, and in no event shall Sublessor be required to initiate any litigation
proceedings or file suit against Master Lessor. Sublessor shall not act or omit
to act in any manner which would violate any provision of the Master Lease or
that would lead to the termination of the Master Lease by Master Lessor.


 


25. Master Lessor’s Consent: This Sublease
and Sublessor’s and Sublessee’s obligations hereunder are conditioned upon
obtaining the written consent of the Master Lessor to this Sublease upon such
terms and conditions as are reasonably acceptable to both Sublessor and
Sublessee (the “Master Lessor’s Consent”). The parties shall cooperate in good
faith to obtain the Master Lessor’s Consent as soon as possible, but not later
than fifteen (15) days after the Execution Date. Any and all costs and
expenses associated with the Master Lessor’s Consent shall be borne solely by
Sublessor. If the Master Lessor’s Consent is not obtained within fifteen
(15) days after the Execution Date, then either Sublessor or Sublessee may
terminate this Sublease by giving the other party ten (10) days’ prior
written notice, in which case this Sublease shall terminate on the day
following the last day of the ten (10)- day notice period (unless Master
Lessor’s Consent is obtained during such ten (10)- day period, in which case
this Sublease shall remain in full force and effect), neither party shall have
any further rights or obligations hereunder and Sublessor shall return to
Sublessee all sums (including the Letter of Credit, if applicable) paid by
Sublessee to Sublessor in connection with Sublessee’s execution hereof. The
return of all sums paid by Sublessee to Sublessor shall be Sublessee’s sole and
exclusive remedy in the event of a termination pursuant to this Paragraph,
including, without limitation, a termination resulting from Sublessor’s
reasonable determination that any term or condition proposed by Master Lessor
to be included in a consent is unacceptable.


 


26. Signage: Sublessee shall have the signage
rights, and the obligations with respect thereto, set forth in Section 17.15
of the Master Lease. Sublessor shall be responsible for the removal of Sublessor’s
existing signage prior to the Delivery Date. Unless otherwise provided in the
Future Lease, Sublessee shall be responsible for the removal of Sublessee’s
signage upon the expiration or earlier termination of this Sublease, and for
the cost to restore any damage caused by such removal.


 


27. No Offer. Submission of this Sublease for
examination or signature by Sublessee does not constitute a reservation of,
option for or option to sublease, and such submission is not effective as a
sublease or otherwise until execution and delivery by both Sublessor and
Sublessee, subject, however, to the provisions of Paragraph 25 above.


 


29. (Intentionally omitted.)


 


30. Fitness Center. A fitness center exists
within the Project and, to the extent it is open and operating, is available
for Sublessee’s use at no additional cost on the terms and conditions provided
herein. Sublessee’s use of the fitness center shall be subject to all the rules and
regulations of the Master Lessor.


 


17

















 


Sublessor
does not represent or warrant to Sublessee that Master Lessor will continue to
open and operate the fitness center for the tenants of the Project. The
continued availability of the fitness center shall not be a condition precedent
to this Sublease, and the failure of the fitness center to be available to
Sublessee shall have no effect upon this Sublease or the rent payable by
Sublessee to Sublessor under this Sublease. Except to the extent caused by the
active negligence or willful misconduct of Sublessor, its agents, employees or
contractors, Sublessor shall not be liable to Sublessee, or its employees,
agents, contractors, sublessees, assignees or invitees, and Sublessee, as a
material part of the consideration to be rendered to Sublessor under this
Sublease, waives all such claims against Sublessor, for any damage to personal
property or injury to persons in or about the fitness center and/or the Project
from any cause whatsoever arising at any time, including, but not limited to, any
damage or injury to any Sublessee employee, agent, contractor, sublessee,
assignee or invitee using the fitness center or Project. Except to the extent
caused by the active negligence or willful misconduct of Sublessor (or Master
Lessor), its agents, employees or contractors, Sublessee shall indemnify,
protect, defend with counsel reasonably acceptable to Sublessor (or Master
Lessor) and hold harmless Sublessor) or Master Lessor) from and against any and
all claims, liabilities, judgments, causes of action, damages, costs and
expenses (including reasonable attorneys’, consultants’ and experts’ fees),
caused by or arising in connection with the use of the fitness center by
Sublessee, its agents, employees, contractors, sublessee, assignees or
invitees, including, without limitation, any claims asserted or caused by
Sublessee’s employees. The foregoing release and indemnity shall survive the
expiration or earlier termination of this Sublease.


 


31. Holding Over. Unless Sublessee continues
to occupy the Sublease Premises pursuant to the Future Lease, if Sublessee
holds over in the Subleased Premises after the expiration or sooner termination
of the Term of this Sublease, Sublessee shall be deemed a month-to-month
subtenant and the Monthly Base Rent during the holdover period shall be 200% of
the monthly base rent payable by Sublessor to Master Lessor during the last
month of the term of the Master Lease. Nothing in this Paragraph shall be
deemed to permit Sublessee to hold over beyond the expiration or earlier termination
of the Term of this Sublease (unless Sublessee continues to occupy the
Subleased Premises pursuant to the Master Lease), and Sublessee shall
indemnify, defend, protect and hold harmless Sublessor or Master Lessor from
and against any and all claims, liabilities, judgments, causes of action,
damages, costs and expenses (including reasonable attorneys’, consultants’ and
experts’ fees) resulting from the failure of Sublessee to surrender the
Subleased Premises in the condition required by this Sublease upon the
expiration or sooner termination of the Term of this Sublease. The foregoing
indemnification shall survive the expiration or earlier termination of this
Sublease.


 


32. Sublessor’s Estoppel. Sublessor
represents and warrants that to Sublessor’s knowledge, as of the date of this
Sublease, (i) the Master Lease is in full force and effect; (ii) neither
Sublessor nor Master Lessor is in material breach of the Master Lease; and (iii) the
Master Lease has not been modified, altered, amended or otherwise changed as
between Master Lessor and Sublessor, except as provided in that certain
Settlement Agreement between Sublessor’s and Sublessee’s respective
predecessors-in-interest dated November 15, 2001.


 


33. Access. Sublessee shall have access to
the Subleased Premises twenty-four (24) hours per day, seven (7) days
per week, subject to Master Lessor’s reasonable security measures.


 


34. Letter of Credit:


 


A. Terms of Letter of Credit. In lieu of the
cash Security Deposit required by Paragraph 5 above, as additional
consideration for value received and a further incentive to maintain
Sublessor’s willingness to enter this Sublease, and as additional collateral so
as to compensate Sublessor for future damages it may suffer by reason of
Sublessee’s defaults hereunder, Sublessee shall deliver to Sublessor, not


 


18

















 


later
than five (5) days after the date of Sublessee’s execution of this
Sublease, an unconditional, clean, irrevocable letter of credit in the amount
of $268,864.25 (“LC Amount”), which letter of credit shall be issued by a
money-center bank (a bank which accepts deposits, maintains accounts, has a
local Silicon Valley office which will negotiate a letter of credit and whose
deposits are insured by the FDIC) reasonably acceptable to Sublessor, shall be
for a term continuing through the last day of the forty-five (45) - day period
following the Expiration Date (or shall contain an “evergreen” provision which
provides that it automatically is renewed on an annual basis unless the issuer
delivers forty-five (45) days’ prior written notice to Sublessor and
Sublessee), shall permit partial draws, shall provide that draws thereunder
will be honored upon receipt by issuer of the letter of credit and a written
statement signed by Sublessor or its authorized agent stating that Sublessor is
entitled to draw down on the letter of credit, shall be freely transferable and
shall be in a form and content reasonably acceptable to Sublessor. Such letter
of credit, together with any other renewal or replacement letters of credit
delivered or to be delivered by Sublessee hereunder shall be referred to
collectively herein as the “LC”. The LC shall provide for forty-five
(45) days’ prior written notice to Sublessor of cancellation or material
change thereof, and shall further provide that, in the event of any
non-extension of the LC, Sublessor shall be entitled to present its written
demand for payment of the entire face amount of the LC, and the proceeds
therefrom so obtained shall be held as provided below. Sublessee shall pay all
expenses, points and/or fees incurred by Sublessee in obtaining the LC.
Additionally, upon a proposed sale or other transfer of any interest in the
Premises, this Sublease or Sublessor (including consolidations, mergers or
other entity changes), Sublessee, at its sole cost and expense and upon ten (10) business
days’ notice, shall, concurrent with Sublessor’s delivery to Sublessee of the
then outstanding LC, deliver to any such transferee, successor or assign a
replacement LC on identical terms (except for the stated beneficiary) from the
same issuer or another bank acceptable to Sublessor, in Sublessor’s reasonable
discretion, naming the new sublessor as the beneficiary thereof. The LC shall
not be mortgaged, assigned or encumbered in any manner whatsoever by Sublessee
without Sublessor’s prior written consent, which may be withheld in Sublessor’s
sole discretion.


 


B. Application of LC. The LC shall be held by
Sublessor without liability for interest and as security for performance by
Sublessee of its obligations under this Sublease. The LC, and any proceeds
therefrom, is not an advance payment of Rent or a measure or limit of
Sublessor’s damages upon Sublessee’s default under this Sublease, and Sublessor
shall not be required to keep any proceeds from the LC separate from
Sublessor’s general funds or to pay interest thereon. If Sublessee defaults
(following any applicable grace periods, it being understood that no notice of
a default by Sublessee hereunder need be given by Sublessor to Sublessee if
Sublessee is the subject of a bankruptcy proceeding) with respect to any
provision of this Sublease, including, but not limited to, provisions relating
to the payment of Rent, Sublessor may, but shall not be required to, draw down
upon all or any portion of the LC for payment of any Rent or other sum in
default, and/or for the payment of any amount that Sublessor may spend or may
become obligated to spend by reason of Sublessee’s default or to compensate
Sublessor for any loss or damage which Sublessor has suffered thereby. The use,
application or retention of the LC, or any proceeds therefrom, by Sublessor
shall not prevent Sublessor from exercising any other right or remedy provided
by this Sublease or by law or in equity, it being intended that Sublessor shall
not first be required to proceed against the LC, and the LC and any proceeds
therefrom shall not operate as a limitation on any recovery to which Sublessor
otherwise may be entitled. Sublessee hereby waives any restriction on the use
or application of the Security Deposit by Sublessor as set forth in California
Civil Code Section 1950.7 or any successor statute. If all or any portion
of the LC is drawn upon, Sublessee, within five (5) days after written
notice from the issuer or Sublessor of the amount so applied, shall reinstate
the LC to the LC Amount required under this Sublease by providing either cash
(so that the full amount of cash and LC proceeds held by Sublessor equals the
LC Amount) or a replacement LC upon the identical terms and conditions set
forth in this Paragraph, and if all or any portion of the LC again is used or
applied, Sublessee shall, within five (5) days after written demand
therefor, again reinstate the LC to the LC Amount required under this Sublease
by providing either cash (so


 


19

















 


that
the full amount of cash and LC proceeds held by Sublessor equals the LC Amount)
or a replacement LC upon the identical terms and conditions set forth in this
Paragraph. Sublessee’s failure to provide Sublessor with cash in the required
amount or to reinstate the LC as required hereunder shall be a material default
under this Sublease, without any obligation of Sublessor to provide any
additional notice of default, and Sublessor shall be permitted to draw down the
entire balance of the LC and apply it to any current or future obligations of
Sublessee in such event. Sublessee hereby grants to Sublessor a security
interest in the LC and any cash proceeds therefrom in accordance with the
applicable provisions of the California Uniform Commercial Code.


 


C. Return of LC. Within thirty (30) days
after the later of the expiration or earlier termination date of this Sublease,
and the date upon which the LC expires, if Sublessee is not then in default
hereunder, Sublessor shall return to Sublessee (without interest) the LC or so
much of the proceeds of the LC as have not been applied by Sublessor pursuant
to this Paragraph, or which are not otherwise required to cure Sublessee’s
defaults.


 


35. Personal Property: During the Term of
this Sublease, without obligation to pay additional Monthly Base Rent with
respect thereto, Sublessee shall have the right to use the following: (i) existing
furniture, (ii) security system, (iii) cabling, (iv) UPS, PDU,
and air handlers in all main data centers and MDF/IDF data closets, (v) existing
racks, and (vi) other personal property currently located in the Subleased
Premises. In addition, at no cost to Sublessee (a) prior to the Commencement
Date, Sublessor shall configure the existing furniture located in the Subleased
Premises to a condition reasonably appropriate for use by Sublessee’s
employees, and (b) within sixty (60) days following the Premises
Delivery Date, Sublessor shall provide to Sublessee and shall configure to
Sublessee’s reasonable requirements any additional furniture and personal
property requested by Sublessee from Sublessor’s inventory of such items
currently in storage. The items listed in the foregoing two sentences shall be
referred to as the “Personal Property”). Sublessee acknowledges that Sublessee
is taking possession of the Personal Property on an “as is, where is, with all
faults” basis, and that Sublessee is not relying on any representations or
warranties of any kind whatsoever, express or implied, including, without
limitation, any implied warranties as to merchantability or fitness for a
particular purpose; provided, however, that Sublessor represents for the
benefit of Sublessee that Sublessor owns the Personal Property free and clear
of all liens. Sublessor shall have no obligation to repair, maintain, replace
or insure the Personal Property, all of which shall be the obligation of
Sublessee. Upon the expiration of this Sublease (or upon early termination for
any reason other than a default of Sublessee under this Sublease), Sublessee
shall purchase the Personal Property from Sublessor pursuant to the bill of
sale in substantially the form attached hereto as Exhibit B and
incorporated by reference herein. Unless Sublessee continues to occupy the
Subleased Premises pursuant to the Future Lease, Sublessee shall be responsible
for removing the Personal Property from the Subleased Premises upon the
expiration or earlier termination (except for early termination resulting from
the default of Sublessee under this Sublease) of the Term.


 


36. Voluntary Termination: Sublessor shall
not voluntarily terminate the Master Lease during the Term unless and until
Master Lessor has agreed in writing to continue this Sublease in full force and
effect as a direct lease between Master Lessor and Sublessee upon and subject
to all of the terms, covenants and conditions of this Sublease for the balance
of the Term hereof, including without limitation the Monthly Base Rent payable hereunder.
If Master Lessor so consents, Sublessee shall attorn to Master Lessor in
connection with any such voluntary termination and shall execute an attornment
agreement in such form as reasonably may be requested by Master Lessor.


 


37. Environmental:


 


A. Sublessee’s Acknowledgment. Sublessee’s
execution of this Sublease shall be deemed Sublessee’s acknowledgment and
agreement that Sublessee has received, and, pursuant to Section


 


20

















 


17.22(b) of
the Master Lease, reviewed same, a copy of each of those certain documents
entitled: (i) PHASE I, ENVIRONMENTAL SITE ASSESSMENT, PACIFIC SHORES
CENTER, REDWOOD CITY, CALIFORNIA, Prepared for: The Jay Paul Company, San
Francisco, California, Prepared by: IRIS ENVIRONMENTAL, Oakland, California, December 20,
1999, Job No. 99-122A; and (ii) PHASE II, ENVIRONMENTAL SITE
ASSESSMENT, PACIFIC SHORES CENTER, 1000 SEAPORT BOULEVARD, REDWOOD CITY,
CALIFORNIA, Prepared for: The Jay Paul Company, San Francisco, California,
Prepared by: IRIS ENVIRONMENTAL, Oakland, California, January 14, 2000,
Job No. 99-122-B.


 


B. Change in Use of Subleased Premises. If
Sublessee elects to use the Subleased Premises for one or more of the Lab Uses,
in addition to the provisions of Section 17.22 of the Master Lease
regarding Hazardous Materials (to the extent incorporated in this Sublease),
Sublessee also shall comply with the following provisions:


 


(i) Use of Hazardous Materials.
Sublessee shall not cause or permit any Hazardous Materials to be brought upon,
kept or used in, on or about the Project by Sublessee or Sublessee’s Parties
without Sublessor’s prior written consent, except that Sublessee may, without
the need for Sublessor’s prior written consent, bring on, keep at and use in,
on or about the Subleased Premises those Hazardous Materials described in Exhibit C
attached hereto and incorporated by reference herein or any similar Hazardous
Materials used for substantially the same purposes in substitution thereof in
compliance with applicable Environmental Laws, even if they are Hazardous
Materials. All such Hazardous Materials will be used, kept and stored by
Sublessee in a manner that complies with all applicable Environmental Laws.
Sublessee shall, at all times, use, keep, test, store, handle, transport, treat
or dispose all such Hazardous Materials in or about the Project in compliance
with all applicable HazMat Requirements. Unless Sublessee continues to occupy
the Subleased Premises pursuant to the Future Lease following the expiration or
earlier termination of this Sublease, Sublessee shall remove Hazardous
Materials used or brought onto the Project during the Sublease Term from the
Project prior to the expiration or earlier termination of this Sublease in
accordance with any applicable HazMat Requirements and the Surrender Plan
approved by Sublessor. For purposes of this Sublease, if Sublessee elects to
use the Subleased Premises for one or more of the Lab Uses, then this Paragraph
37.B.(i) of this Sublease shall supersede in their entirety the provisions
of Section 17.22(c) of the Master Lease.


 


(ii) Sublessee’s Obligation to Promptly
Remediate. If the presence of Hazardous Materials on the Subleased Premises
after the Premises Delivery Date results from an act or omission of Sublessee
(or Sublessee’s successors-in-interest), its agents, employees, invitees,
vendors, contractors, guests, or visitors results in contamination of the
Project or any water or soil beneath the Project in violation of applicable
HazMat Requirements, Sublessee shall promptly take all action necessary or
appropriate to test, investigate and remedy that contamination, at its sole
cost and expense, provided that Sublessor’s consent to such action shall first
be obtained, which consent shall not be unreasonably withheld, conditioned or
delayed.


 


(iii) Notification. Sublessor and
Sublessee each agree to promptly notify the other of any communication received
from any governmental entity concerning Hazardous Materials or the violation or
alleged violation of Environmental Laws that relate to the Project. In
addition, Sublessee shall promptly provide to Sublessor copies of any approvals
or disapprovals received from any relevant governmental agency in connection
with permits, licenses or periodic or episodic testing or remediation of the
Subleased Premises by Sublessee required by HazMat Requirements, including but
not limited to the plans, permits and licenses described in Exhibit D
attached hereto and incorporated by reference herein or any other such plans,
permits and licenses instead performed by Sublessee pursuant to HazMat
Requirements. Without limiting the foregoing, Sublessee shall deliver to
Sublessor any applications for decommissioning the Subleased Premises pursuant
to HazMat Requirements at the same time such application is delivered to the


 


21














 


relevant
governmental agency. Sublessor shall have the opportunity to participate in,
and comment on, any such decommission or surrender plan application, and the
final version of such plan shall be subject to Sublessor’s written approval.


 


(iv) Testing. Sublessor shall have the
right to conduct tests of the Subleased Premises at any time that Master Lessor
seeks to sell or refinance the Subleased Premises, or if Sublessor has
reasonable grounds to believe that Hazardous Materials may exist at the Subleased
Premises in violation of the terms of this Sublease. Such tests shall be
performed in order to determine whether any contamination of the Subleased
Premises or the Project has occurred as a result of Sublessee’s use. Sublessee
shall be required to pay the reasonable cost of such tests of the Subleased
Premises if they are performed due to Sublessor’s reasonable grounds to believe
that Hazardous Materials may exist at the Subleased Premises in violation of
the terms of this Sublease (Master Lessor shall pay the costs of such tests in
the event of a sale or refinancing); provided, however, that if Sublessee
conducts its own tests of the Subleased Premises using third party contractors
and test procedures acceptable to Sublessor which tests are certified to Sublessor,
Sublessor shall accept such tests in lieu of such tests to be paid for by
Sublessee. In connection with such testing, upon the request of Sublessor,
Sublessee shall deliver to Sublessor or its consultant such non-proprietary
information concerning the use of Hazardous Materials in or about the Subleased
Premises by Sublessee or any Sublessee Parties. If contamination has occurred
in violation or excess of the HazMat Requirements for which Sublessee is liable
under this Section 37.B.(iv), Sublessee shall pay all costs to conduct
such tests. If no such contamination is found, Sublessor shall pay the costs of
such tests. Sublessee shall, at its sole cost and expense, promptly and
satisfactorily remediate any environmental conditions identified by such
testing in accordance with HazMat Requirements. Sublessor’s receipt of or
satisfaction with any environmental assessment in no way waives any rights
which Sublessor may have against Sublessee. Notwithstanding anything herein to
the contrary, within thirty (30) days prior to the Expiration Date or any
earlier date on which this Sublease terminates, Sublessee shall, at Sublessee’s
sole expense, deliver to Sublessor a phase II environmental audit of the
Subleased Premises showing the environmental condition of the Subleased
Premises and the completion of Sublessee’s Surrender Plan for the Subleased
Premises; provided, however, that this sentence shall not apply if Sublessee
continues to occupy the Subleased Premises pursuant to the Future Lease
following the expiration or earlier termination of this Sublease.


 


(v) Dispute Resolution. Notwithstanding
anything herein to the contrary, if Sublessor requires Sublessee to perform any
testing, clean-up or remediation of Hazardous Materials, or if Sublessor
requires Sublessee to modify Sublessee’s use of Hazardous Materials at the
Subleased Premises in a manner or in amounts other than as is required by
Environmental Laws pursuant to either this Paragraph 37.B. or Section 18.B.
above, and Sublessee believes that Sublessor’s requirements are not
commercially reasonable, then if Sublessee provides Sublessor with written
notice thereof (the “Dispute Notice”) within fifteen (15) business days of
the date on which Sublessor first informs Sublessee in writing of such requirement,
then such dispute shall be remedied pursuant to the terms of this Paragraph
37.B.(v). If such a dispute exists, Sublessor and Sublessee shall meet within
ten (10) business days after the date of the Dispute Notice and attempt in
good faith to resolve the dispute. If, despite such meeting, the parties cannot
resolve the dispute, each of Sublessor and Sublessee shall separately designate
to the other in writing an environmental expert to determine if the requirement
in question is commercially reasonable. Each environmental expert designated
shall have at least ten (10) years’ experience in performing environmental
audits of real property in San Mateo County and shall be paid by the party
choosing such expert. The failure of either party to appoint an environmental
expert within the time allowed shall be deemed equivalent to appointing the
environmental expert appointed by the other party, who shall then determine
whether the requirement in question is commercially reasonable. The two (2) environmental
experts shall then each prepare a written proposal of what a commercially
reasonable environmental requirement for the activity in question. If the two (2) environmental
experts are unable to agree on whether the requirement in question is


 


22

















 


commercially
reasonable, or, in lieu thereof, to come to agreement on a commercially
reasonable environmental requirement for the issue in question, within fifteen
(15) business days of their appointment, the two designated environmental
experts shall jointly designate a third similarly qualified environmental
expert. The third environmental expert shall within ten (10) business days
following its appointment, then determine which of the two environmental
experts’ determinations most closely reflects an appropriate, commercially
reasonable requirement with respect to the Hazardous Materials issue in
question. The third environmental expert shall have no rights to adjust, amend
or otherwise alter the determinations made by the environmental experts
selected by the parties, but must select one or the other of such experts’
submissions. The determination by such third environmental expert shall be
final and binding upon the parties. Said third environmental expert shall, upon
selecting the determination, concurrently notify both parties hereto. The
parties shall share the expenses of the third environmental expert equally.


 


(vi) Survival. Sublessee’s obligations
pursuant to this Paragraph 37.B. shall survive the expiration or earlier
termination of this Sublease.


 


38. Surrender if No Future Lease. If for any
reason Sublessee is not entitled to continue to occupy the Subleased Premises
pursuant to the Future Lease, upon the expiration or earlier termination of
this Sublease, Sublessee shall surrender the Subleased Premises to Sublessor in
the condition required by Section 17.09(a) of the Master Lease and
shall remove any alterations or improvements (including the Sublessee
Improvements) if required to do so pursuant to Paragraph 14.C. above.


 


39. Right to Make Building Repairs. Pursuant
to Section 6.01(b) of the Master Lease, Sublessor has a right to
perform repairs required to be made by Master Lessor if Master Lessor defaults
with respect to such obligations, and to be reimbursed, together with interest
thereon, for the cost of such repairs. Upon prior written notice to Sublessor,
Sublessee shall have the right to exercise the rights set forth in Section 6.01(b) in
strict accordance therewith. If Sublessee does not timely meet the requirements
of Section 6.01(b), or if Master Lessor does not comply with Section 6.01(b),
Sublessor shall have no liability to Sublessee with respect thereto other than
the obligation set forth in Paragraph 24.A.(iv) above.


 


40. Right to Contest Property Taxes. Pursuant
to Section 9.04 of the Master Lease, Sublessor has a right to seek a
reduction in the assessed valuation of the Subleased Premises or to contest any
real property taxes to be paid by Sublessor with respect to the Subleased
Premises. Upon prior written notice to Sublessor, Sublessee shall have the
right to exercise the rights set forth in Section 9.04 in strict
accordance therewith. If Sublessee does not timely meet the requirements of Section 9.04,
or if Master Lessor does not comply with Section 9.04, Sublessor shall
have no liability to Sublessee or with respect thereto other than the
obligation set forth in Paragraph 24.A.(iv) above, and Sublessee shall
indemnify Sublessor for any liability Sublessor incurs as a result of
Sublessee’s failure to comply with the provisions of Section 9.04 of the
Master Lease.


 


41. Security for Sublessor’s Performance.


 


A. Events Necessitating the Posting of a
Deficiency Letter of Credit. Sublessor shall deliver to Sublessee a letter
of credit, in the form described in Paragraph 41.B. below, in the amount of
Three Million and No/100 Dollars ($3,000,000.00) (“Deficiency Letter of
Credit”), upon the occurrence of either of the following:


 


(1) If at any time following the second
anniversary of the Commencement Date, Sublessor’s average cash on hand for any
six (6)- month period, as displayed in Sublessor’s 10-K and 10-Q, drops below
One Hundred Million and No/100 Dollars ($100,000,000.00) (a “Cash Deficiency
Event”), Sublessee shall provide Sublessor with written notice that a Cash
Deficiency Event has occurred. Within


 


23

















 


thirty
(30) days after Sublessor receives any such notice from Sublessee (a “Cash
Deficiency Notice”), Sublessor shall deliver to Sublessee the Deficiency Letter
of Credit, provided that a Cash Deficiency Event has occurred, or


 


(2) If, at any time during the Term, Sublessor
fails to pay Base Rent under the Master Lease when due, Master Lessor has made
an unconditional demand (“Master Lessor Base Rent Demand”) upon either
Sublessor or Sublessee for payment of such Base Rent, and Sublessor fails to
pay the Base Rent at issue within five (5) business days after the date of
Master Lessor’s Base Rent Demand (“Event of Sublessor’s Default”), within thirty
(30) days following such Event of Sublessor’s Default Sublessor shall
deliver to Sublessee the Deficiency Letter of Credit.


 


B. Terms of the Deficiency Letter of Credit.
The Deficiency Letter of Credit shall be issued by a bank, selected by
Sublessor and reasonably acceptable to Sublessee, that accepts deposits,
maintains accounts, has an office in the San Francisco Bay Area, and that will
negotiate a letter of credit, the deposits of which must be insured by the
Federal Deposit Insurance Corporation (“Issuer”). Sublessor shall pay all
expenses, points or fees incurred to obtain and maintain the Deficiency Letter
of Credit, including, without limitation, all costs or fees charged by the
Issuer in connection with a draw against a Deficiency Letter of Credit. The
Deficiency Letter of Credit shall provide that, once per calendar month during
the term of the Letter of Credit, drafts will be honored, up to the amount of
the difference between the Monthly Base Rent payable by Sublessee under this
Sublease and the monthly Base Rent payable by Sublessor under the Master Lease,
together with any applicable late charges payable by Sublessor under the Master
Lease for such month (“Monthly Base Rent Differential”) (plus any costs imposed
by the Issuer in connection with the draw), on sight if accompanied by a
statement on Sublessee’s company letterhead signed by an officer of Sublessee
asserting that (i) under Section 12.01(b) of the Master Lease,
Sublessor has not paid the Base Rent due under the Master Lease when due and
such failure has continued for four (4) business days after written notice
thereof from Master Lessor, and that Master Lessor has made a Master Lessor
Base Rent Demand upon either Sublessor or Sublessee for the payment of such
Base Rent, and (ii) Sublessee is entitled to draw the amount requested
from the Deficiency Letter of Credit Issuer pursuant to Paragraph 41 of this
Sublease and that such requested amount does not exceed the Monthly Base Rent
Differential for such month (plus any costs imposed by Issuer in connection
with the draw). In addition, the Deficiency Letter of Credit shall provide that
the term of the Letter of Credit (“Letter of Credit Term”) will expire upon the
earlier to occur of (y) the date that is thirty (30) days after the
expiration or earlier termination of this Sublease, and (z) the date that
the Issuer receives a statement signed by an officer of Sublessor asserting
that a Permitted Termination Event (defined below) or a Restricted Assignment
(defined below) has occurred. During the Letter of Credit Term, any Deficiency
Letter of Credit shall be automatically renewable on an annual basis, and for
thirty (30) days following the expiration of the Letter of Credit Term.


 


Notwithstanding anything to the contrary contained
in this Paragraph 41.B., if Sublessor fails to renew or replace the Deficiency
Letter of Credit at least thirty (30) days prior to its expiration,
Sublessee may, without prejudice to any other remedy it has, upon five (5) business
days’ written notice to Sublessor, and provided Sublessor does not renew or
replace such Deficiency Letter of Credit during such period, draw on all of the
Deficiency Letter of Credit and such drawn amount shall be held by Sublessee
solely to pay the Monthly Base Rent Differential in the amounts and at the
times otherwise permitted by this Paragraph; provided, however, Sublessee must
certify to Sublessor each of the items described in subsections (i)-(ii) above
of this Paragraph 41.B. before Sublessee may, in any calendar month, disburse
any payments from such drawn amount, and all amounts so drawn from the
Deficiency Letter of Credit (less any amounts disbursed to Sublessee in
accordance with the provisions of this sentence) shall be immediately refunded
to Sublessor upon Sublessor’s replacement or renewal of such Deficiency Letter
of Credit. If there is a termination of the Master Lease for any reason other
than Sublessor’s uncured default under the Master Lease, such event shall


 


24

















 


be
a “Permitted Termination Event” and shall terminate the Deficiency Letter of
Credit automatically. If the Sublease or Sublessee’s interest in the Subleased
Premises is assigned other than to a Sublessee Affiliate, or if Sublessee
attempts to transfer the Deficiency Letter of Credit other than to a Sublessee
Affiliate, either of such events shall be a “Restricted Assignment” and shall
terminate the Deficiency Letter of Credit automatically. Sublessee shall notify
Sublessor at least ten (10) days in advance of a transfer to a Sublessee
Affiliate, unless such notification is restricted by the regulations or
requirements of the Securities and Exchange Commission, in which event such
notification shall be made promptly following the date of such transfer.


 


C. Rights and Obligations of the Parties. If,
in any calendar month during the Letter of Credit Term, Sublessor has not paid
the Base Rent due under the Master Lease when due, Master Lessor has made a
Master Lessor Base Rent Demand upon either Sublessor or Sublessee for the
payment of such Base Rent, and Sublessor fails to pay the Base Rent at issue
within three (3) business days after the date of the Master Lessor Base
Rent Demand, then Sublessee, at its option, may draw from the Deficiency Letter
of Credit an amount of cash that in no event exceeds the Monthly Base Rent
Differential for the applicable calendar month (plus costs imposed by the
issuer in connection with the draw), and shall pay all such drawn amounts to
Master Lessor within five (5)- business days after any such draw. In the
alternative, within such five (5)- business day period, Sublessee may deliver
to Sublessor written evidence certified by an officer of Sublessee and
otherwise reasonably acceptable to Sublessor (“Payment Notice”) that Sublessee
has paid Sublessor’s full Monthly Base Rent Differential to Master Lessor for
such calendar month, together with a statement that Sublessee will retain the
Monthly Base Rent Differential (together with the issuer’s costs) as
reimbursement for that portion of Sublessee’s payment allocable to the Monthly
Base Rent Differential and costs. In the event Sublessee either fails to pay
any such amounts to Master Lessor within such period or to provide Sublessor
with the Payment Notice (a “Payment Default”), the Deficiency Letter of Credit
shall automatically terminate. Notwithstanding anything to the contrary
contained in this Sublease, in the event Sublessee draws on the Deficiency
Letter of Credit due to a Monthly Base Rent Differential for any calendar
month, Sublessee agrees that Sublessor shall be forever released from all
obligations and liabilities under this Sublease relating to Sublessor’s
obligation hereunder to pay the Base Rent due for such particular calendar
month under the Master Lease. Also notwithstanding anything in this Sublease to
the contrary, Sublessor shall have the right, from time to time during the
Letter of Credit Term, but not more than once each calendar year during the
Letter of Credit Term and upon no less than ten (10) days’ prior written
notice to Sublessee, to replace Deficiency Letter of Credit with a replacement
letter of credit meeting all of the terms and conditions set forth in this
Paragraph. Sublessee shall return the Deficiency Letter of Credit (or any
unapplied proceeds thereof) to Sublessor, or shall cause the Issuer to cancel
the Deficiency Letter of Credit, within thirty (30) days following the
expiration or termination of the Letter of Credit Term.


 


D. Termination of Master Lease. In the event
of a termination of the Master Lease due solely to a default, beyond applicable
notice and cure periods, by Sublessor thereunder, and not as a result of any
fault of Sublessee, Sublessee shall have the right at its option, and without
prejudice to any other remedy which Sublessee may have, to draw on all of the
Deficiency Letter of Credit and retain such proceeds.


 


[SIGNATURES APPEAR ON NEXT PAGE]


 


25

















 


IN WITNESS WHEREOF, the parties have executed this
Sublease on the day and year first above written.


 


 


	
  SUBLESSEE:

  	
   

  	
  SUBLESSOR:

  
	
   

  	
   

  	
   

  
	
  PDL
  BIOPHARMA, INC.,

  	
   

  	
  OPENWAVE
  SYSTEMS INC.,

  
	
  a
  Delaware corporation

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark McDade

  	
   

  	
  By:

  	
  /s/
  Gregory Wrenn

  
	
   

  	
  Mark
  McDade

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
  Title:

  	
  SVP &
  General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  34801
  Campus Drive

  	
   

  	
  Address:

  	
  2100
  Seaport Boulevard

  
	
   

  	
  Fremont,
  CA 94555

  	
   

  	
   

  	
  Redwood
  City, CA 94063

  
	
   

  	
  Attn:
  Laurie Torres

  	
   

  	
   

  	
  Attn:
  Real Estate Department

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (510)
  574-1400

  	
   

  	
  Telephone:

  	
  (650)
  480-8000

  



 


26

















 


EXHIBIT “A”


MASTER LEASE


 

















 


TRIPLE NET
BUILDING LEASE


 


Between


PACIFIC
SHORES CENTER LLC,


as


LESSOR


 


and


 


PHONE.COM,
INC.


a California corporation


as


LESSEE


 


for


 


PREMISES


At


Pacific Shores Center


Building 9


Redwood City, California


 














 


ARTICLE I


PARTIES


 


Section 1.01. Parties. This Lease, dated for
reference purposes, and effective as of February 4, 2000, is made by and
between PACIFIC SHORES CENTER LLC, or assignee (provided that such assignee is
an entity controlled or managed, directly by Jay Paul) (“Lessor”) and
PHONE.COM, INC., a California corporation (“Lessee”).


 


ARTICLE II


PREMISES


 


Section 2.01. Demise of Premises. Lessor hereby
leases to Lessee and Lessee leases from Lessor for the term, at the rental, and
upon all of the terms and conditions set forth herein, Premises consisting of
one building (“Building”) of ten free standing, office and research and
development buildings (“Buildings”) to be constructed by Lessor on real
property situated in Redwood City, County of San Mateo, State of California and
commonly known as Pacific Shores Center which Lessor is in the process of
acquiring (the “Property”). The Building will be five stories tall and will
consist of approximately two hundred seventy-nine thousand five hundred eighty-four
(279,584) rentable square feet, as more particularly described and
depicted herein in Exhibit “A.” The actual rentable square footage of the
Building (the “Rentable Area”) will be determined and certified by Lessor’s
architect by a method described as “dripline,” whereby the measurement
encompasses the outermost perimeter of the constructed building, including
every projection thereof and all area beneath each such projection, whether or
not enclosed, with no deduction for any inward deviation of structure and with
the measurement being made floor by floor, beginning from the top of the
Building provided that, Lessee shall have the right, to be exercised prior to
Commencement Date, to measure the “as-built” Building to confirm that the
aforesaid dripline methodology was accurately utilized by Lessor’s architect.
The Buildings and appurtenances described herein, the Property, and all other
improvements to be built on the Property are together designated as the
“Project.” The Building leased hereunder is commonly known as Building 9 -
Pacific Shores Center, Redwood City, California and its appurtenances described
herein are herein designated as the “Premises.”


 


Section 2.02. Common Area. During the Lease
Term, Lessee shall have the non-exclusive right to use the Common Area defined
herein. Lessor reserves the right to modify the Common Area, including reducing
the size or changing the use, configuration and elements thereof in its sole
discretion and to close or restrict access from time to time for repair, maintenance
or to prevent a dedication thereof, provided that Lessee nonetheless shall have
access to parking and the Premises during such activities and, provided
further, that Lessor will continue to maintain the baseball and soccer fields
and the amenities/athletic facility or replacement items of like kind for so
long as Lessor is legally able to do so during the Lease Term. Lessor further
reserves the right to establish, repeal and amend from time to time rules and
regulations for the use of the Common Area (provided that, to the extent that
any conflict between any new Rules and Regulations and this Lease
(including the Rules and Regulations attached hereto as Exhibit “L”)
would materially and adversely affect Lessee’s use of the Premises, this Lease
shall govern, and to grant reciprocal easements or other rights to use the
Common Area to owners of other property. “Common Area” includes, without
limitation,


 


2

















 


landscaping,
sidewalks, walkways, driveways, curbs, parking lots (including striping),
sprinkler systems, lighting, surface water drainage systems and
amenities/athletic facility, as well as baseball and soccer fields, and, to the
extent required by government authorities having jurisdiction over Lessor’s
development of the Project, a waterfront park, perimeter walking/biking trail,
amphitheater, marine life resource center, retreat and conference center, child
care center and such further portions of the Project or additional or different
facilities as Lessor may from time to time designate or install or make
available for the use by Tenant in common with others.


 


Section 2.03. Parking. Lessor shall provide
Lessee with parking spaces within the Common Area in the ratio to space within
the Building as required by law which is three (3) spaces per one thousand
(1,000) square feet of interior space. In the event Lessor elects or is
required by any law to limit or control parking at the Premises, whether by
validation of parking tickets or any other method of assessment, Lessee agrees
to participate in such validation or assessment program under such reasonable rules and
regulations as are from time to time established by Lessor. Said parking shall
be provided at no additional cost except as expressly provided herein in Article VI
for reimbursement of repair, replacement and maintenance, and except for any
governmental or public authority charges, fees or impositions of any nature
hereafter imposed.


 


Section 2.04. Construction.


 


(a) Government Approvals. Lessor shall
diligently pursue obtaining governmental approval of a Site Plan and Buildings
design and elevations with respect to the development of the Premises, copies
of which are attached hereto as Exhibit “A.” The parties acknowledge and
agree that the final footprint and elevations of the Buildings may vary from
those attached as Exhibit “A” because the plans and specifications will
undergo a plancheck process with the City of Redwood City and Lessor will make
such revisions as are required or are otherwise deemed necessary or appropriate
by Lessor, provided however, that nothing herein shall be deemed to relieve
Lessor from the duty to develop the Building substantially in compliance with Exhibit “A,”
and further provided that all revisions to the plans and specifications which
may materially and adversely affect the use, accessibility, safety or design of
the Premises shall be subject to the review and (unless imposed by law or any
governmental agency) consent of Lessee, which shall not be unreasonably withheld,
conditioned or delayed, provided further that any delay to the construction
schedule caused by such review and giving or withholding of consent shall be
Lessee Delay.


 


(b) Construction of Shell Buildings. Lessor,
utilizing Rudolph & Sletten (or such alternate as Lessor in its sole
discretion may select) as general contractor (“General Contractor”), shall
construct the “Building Shell” (as defined in the attached Exhibit “D”) in
accordance with (i) plans and specifications to be attached as Exhibit “B”
and (ii) all existing applicable municipal, local, state and federal laws,
statutes, rules, regulations and ordinances. Lessor shall pay all costs of
constructing the Building Shell.


 


(c) Construction of Tenant Improvements. All
improvements not included within the scope of the Building Shell shall be
deemed “Tenant Improvements.” Lessor, using the General


 


3

















 


Contractor,
shall construct the Tenant Improvements and shall contribute the Tenant
Improvement Allowance towards the payment of same and Lessee shall pay all
costs associated with same in excess of the Tenant Improvement Allowance.
Notwithstanding the foregoing, Lessee may select a general contractor other
than Lessor’s General Contractor to construct the Tenant Improvements by giving
written notice to Lessor on or before April 1, 2000, provided that (i) such
general contractor has sufficient financial strength and experience in
constructing first class quality improvements of the type to be constructed in
the Premises to reasonably satisfy Lessor and any lender whose loan is secured
by the Project or any part thereof and, (ii) Lessee agrees in such notice
that the Tenant Improvements identified on Exhibit N hereto as “Early
Construction Improvements” shall be constructed by Lessor’s General Contractor
to facilitate construction of the balance of the Tenant Improvements by the
Lessee selected general contractor (that the Early Construction Improvements
shall retain concurrent status as Tenant Improvements, the cost of which is to
be charged to the Tenant Improvement Allowance), and (iii) such general
contractor is ready, willing and able and agrees to construct the Tenant
Improvements in accordance with Lessor’s General Contractor’s construction
schedule, and (iv) any failure by such Lessee selected general contractor
to construct the Tenant Improvements in accordance with Lessor’s General
Contractor’s construction schedule shall be Lessee Delay. If Lessor’s General
Contractor constructs the Tenant Improvements, or if Lessee selects a general
contractor other than Lessor’s General Contractor, but Lessor’s General
Contractor nonetheless contracts with Lessor to construct the “Early
Construction Improvements,” in each case the contract shall be a guaranteed
maximum price contract based upon the successful bids of subcontractors and/or
negotiated prices as provided in Section 2.04(f). The total compensation
to the General Contractor under such contract shall be equal to a contractor’s
fee not to exceed an amount equal to 2.5% of the contract (provided that a
contractor’s fee shall not be payable for change orders required due to
coordination errors caused by the General Contractor or any of its
subcontractors) and an amount not to exceed an amount equal to 2 1/2% of the contract for general conditions plus
an amount equal to .75% of the contract for insurance.


 


(d) Tenant Improvement Plans and Cost Estimate.
Lessee shall work with Lessor’s architect to develop interior schematic
drawings and Lessee shall approve final interior schematic drawings for the
Tenant Improvements no later than June 6, 2000. Lessee shall work with
Lessor’s architect to develop working drawings outlining, among other things,
Lessee’s wall layout, detailed electrical and air conditioning requirements and
finishes (“Working Drawings”) and Lessee shall approve final Working Drawings
on or before July 15, 2000. The cost of the interior schematic drawings
and Working Drawings shall be a Tenant Improvement cost paid by Lessee. Based
on this information, Lessee shall cause the General Contractor to prepare and
deliver to Lessee a budget for the Tenant Improvements (“Budget”). Lessee shall
approve the Budget (or modify the same with Lessor’s consent), in writing,
within fourteen (14) days thereafter. The Working Drawings and Budget must
be approved by Lessor and Lessee (neither of whom shall unreasonably withhold
or delay such consent) in writing and must provide for Tenant Improvements of
quality equal to or greater than the Interior Specifications Standards set
forth in Exhibit “C” and must encompass the buildout of the entire
Premises. Once the Budget is approved, Lessor shall enter into a guaranteed
maximum price (“GMP”) contract with the General Contractor for the construction
of the Tenant Improvements, and any additional costs for Tenant Improvements in
excess of the GMP contract shall be Lessor’s responsibility except for Lessee
initiated change orders which shall be Lessee’s responsibility.


 


4

















 


(e) Cost Responsibilities. Attached as Exhibit “C”
to this Lease is a Work Letter Agreement for Tenant Improvements, and Exhibit “D,”
Cost Responsibilities of Lessor and Lessee, which together with this Section 2.04,
describe the planning and payment responsibilities of the Lessor and Lessee
with respect to the construction of the Shell Building and Tenant Improvements
at the Premises. All approved Tenant Improvements shall be constructed in
accordance with a construction schedule approved by Lessor.


 


(f) Tenant Improvement Allowance. Lessor shall
provide to Lessee a semi-improved “cold” shell facility as described in Exhibit “D”
attached and a Tenant Improvement Allowance of $27.50 per square foot to be
used for the Tenant Improvements outlined in Exhibit “D,” all as outlined
in the Tenant Improvement Work Letter attached as Exhibit “C.”
Subcontracts for all Tenant Improvement Work shall be obtained by a sealed
competitive bid process (involving at least two qualified bidders) wherever
practical and as to work done without such process, Lessor or the General
Contractor shall provide reasonable assurance to Lessee that the cost and
expense of same is competitive in the industry for first-class workmanship and
materials.


 


(g) Payment for Tenant Improvements. Within
five (5) business days after the Budget is approved by Lessor and Lessee,
Lessee shall deposit Lessee’s share of the amount budgeted for the first three (3) months
of the construction schedule (together with the cost of any Tenant Improvements
already made), with Lessor’s construction lender to be held in an escrow
account. Until the Tenant Improvements are completed, Lessee shall deposit, on
the first day of the third calendar month of the construction schedule,
Lessee’s share of the amount budgeted for the following three (3) months
and on the first day of the sixth calendar month of the construction schedule
Lessee’s share of all remaining budgeted amounts. Lessee’s share is the portion
of the budgeted amount not paid from the Tenant Improvement Allowance as
described in the following sentence. Said construction lender shall issue
payments from said account pursuant to the construction contract for the Tenant
Improvements with a portion of each payment being taken from the Tenant
Improvement Allowance (in the same ratio as the Tenant Improvement Allowance
bears to the entire Budget total) and the balance being paid from Lessee’s
deposit, until the Tenant Improvement Allowance is exhausted, whereupon any
remaining payments shall be made 100% by Lessee. Lessor shall manage the
construction of the Tenant Improvements for a supervision fee of 4% of the
Budget (as the same may change by agreement of the parties) due and payable in
nine equal monthly installments beginning on the first day of the calendar month
following the calendar month in which the Budget is first approved.


 


(h) Lessee’s Fixturing Period. At least thirty
(30) days prior to such date that is estimated by Lessor to be forty-five
(45) days prior to the Commencement Date, Lessor shall notify Lessee of
the date that is estimated to be forty-five (45) days prior to the
Commencement Date. Lessor shall provide Lessee access to the Premises during
the forty-five (45) day period prior to the estimated Commencement Date
(“Lessee’s Fixturing Period”) for the purpose of installing furnishings and
equipment, e.g. security system, furniture system and phone and data system,
provided, that Lessee and Lessee’s employees and contractors shall at all times
avoid interfering with Lessor’s ongoing work to bring the Premises to a
substantially completed condition. Except for payment of Base Rent, all terms
and provisions of this Lease shall apply during Lessee’s Fixturing Period,
including, without limitation, Lessee’s indemnity and other obligations set
forth in Sections 7.07., 7.08. and 17.22. hereof.


 


5

















 


(i) Construction of Offsite and Onsite
Improvements. In addition to the Building Shell and Tenant Improvements, and
concurrently with its construction schedule Lessor shall construct both offsite
and onsite improvements required as a condition to the Certificate of Occupancy
for the Building which are (i) (onsite) shoreline park, baseball field,
soccer field and an amenities/athletic facility, and (ii) (offsite) Seaport
Boulevard improvements and deep water slough restoration.


 


(j) Lessee Termination Rights. In the event
that either (i) Lessor is not the fee owner of the Property on or before April 1,
2000, or (ii) Lessor has not presented Lessee with reasonable evidence on
or before June 1, 2000, that it has closed a loan with one or more lenders
and obtained financing in an amount sufficient to purchase the Property, to
complete the construction of the Building Shell and all onsite and offsite
improvements described in subparagraph (i) above, and to fund the Tenant
Improvement Allowance, then Lessee shall have the right to terminate this Lease
upon written notice to Lessor within sixty (60) days after either April 1,
2000 or June 15, 2000, as applicable. If Lessee terminates this Lease in
accordance with this paragraph, neither party shall have any further rights or
obligations hereunder.


 


ARTICLE III


TERM


 


Section 3.01. Lease Term.


 


(a) Commencement Date. The term of this Lease
(“Lease Term”) shall be for twelve (12) years beginning on the earlier of (i) the
first date on which Lessee occupies or conducts business at the Premises or (ii) the
date on which a Certificate of Occupancy is issued affecting the Building and
the Seaport Boulevard improvements, the baseball and soccer fields and the
amenities/athletic facility have been substantially completed (the
“Commencement Date”) provided that, (A) for each day of delay by Lessee in
failing to approve the interior schematic drawings or the Working Drawings when
required under Section 2.04(d), or (B) for each day of delay by
Lessee in failing to approve the Budget, in writing, within fourteen
(14) days after delivery by the General Contractor as provided in Section 2.04(d),
or (C) for each day of delay caused by any changes to the approved Working
Drawings requested by Lessee, or (D) for each day that any other act or
omission by Lessee causes the construction schedule for Tenant Improvements to
be delayed provided that Lessor gives Lessee written notice of such Lessee Delay
within five (5) business days after its occurrence (collectively “Lessee
Delay”), the Commencement Date shall occur one (1) day in advance of the
date of the Certificate of Occupancy for each such day of delay. For example,
if seven (7) days of Lessee Delay causes the date of issuance of the
Certificate of Occupancy to occur on April 8, 2001 rather than April 1,
2001, the Commencement Date shall be April 1, 2001 for all purposes,
including payment of Base Rent and Additional Rent. The Lease Term shall expire,
unless sooner terminated or extended as provided herein, on the date which
completes twelve years after the Commencement Date occurs or is deemed to have
occurred, e.g. if the date on which the Certificate of Occupancy is issued or
deemed to be issued for the Building is April 1, 2001, the Lease Term
shall expire on


 


6

















 


March 31,
2013 and if that date is April 3, 2001, the Lease Term shall expire on April 2,
2013 (“Expiration Date”). The parties shall execute a “Memorandum of
Commencement of Lease Term” when the Commencement Date becomes known, which
shall include a certification of the actual Rentable Area of the Building
determined by the methodology described in Section 2.01. and the actual
monthly installments of Base Rent to be paid pursuant to Section 4.01.,
and shall be substantially in the form attached hereto as Exhibit “E.”


 


(b) Scheduled Commencement Date. Lessor shall
use commercially reasonable efforts to cause the Certificate of Occupancy for
the Building to be issued no later than April 1, 2001 (“Scheduled
Commencement Date”). If a Certificate of Occupancy is not issued for the
Building on or before the Scheduled Commencement Date, this failure shall not
affect the validity of this Lease or the obligations of Lessee under it. If the
Commencement Date is adjusted for delay from any cause, the Expiration Date
shall be likewise adjusted for a like period.


 


(c) Termination in Event of Delay. If for any
reason Lessor is unable to cause the issuance of a Certificate of Occupancy for
the Building, on or before the date which is one hundred eighty (180) days
after the Scheduled Commencement Date (for a reason other than Lessee Delay or
delay excused under Section 20.01.), Lessee, at its sole election, may
terminate this Lease upon giving notice within ten (10) days thereafter.
Failure to give such notice within said time period constitutes an irrevocable
waiver of the foregoing right to terminate under this Section 3.01(c).


 


Section 3.02. Option to Extend.


 


(a) Exercise. Lessee is given two (2) options
to extend the Lease Term (“Option to Extend”), each for a five (5) year
period (“Extended Term”) following the date on which the initial Lease Term of
first Extended Term would otherwise expire, which option may be exercised only
by written notice (“Option Notice”) from Lessee to Lessor given not less than
twelve (12) months prior to the end of the initial Lease Term or the first
Extended Term, as the case may be, (“Option Exercise Date”); provided, however,
if Lessee is in material default under this Lease (beyond the expiration of any
applicable notice period) on the Option Exercise Date or on any day thereafter
on or before the last day of the initial Lease Term of the first Extended Term,
the Option Notice shall be totally ineffective, and this Lease shall expire on
the last day of the initial Lease Term or the first Extended Term, if not
sooner terminated. The right of Lessee to exercise an Option to Extend shall
not be affected by any sublease or assignment of this Lease previously entered
into by Lessee pursuant to the provisions of this Lease.


 


(b) Extended Term Rent. In the event Lessee
exercises its Option to Extend set forth herein, all the terms and conditions
of this Lease shall continue to apply except that the Base Rent payable by
Lessee during each Option Term shall be equal to one hundred percent
(100%) of Fair Market Rent (defined below), as determined under
subparagraph (c) below. “Fair Market Rent” shall mean the effective rate
being charged (including periodic adjustments thereto as applicable during the
period of the Extended Term), for comparable space in similar buildings in the
vicinity, i.e. of a similar age and quality considering any recent renovations
or modernization, and floor plate size or, if such comparable space is not
available, adjustments shall be made in the determination of Fair Market Rent
to reflect the age and quality of the Building and Premises


 


7

















 


as
contrasted to other buildings used for comparison purposes, with similar
amenities, taking into consideration: size, location, floor level, leasehold
improvements or allowances provided or to be provided, term of the lease,
extent of services to be provided, the time that the particular rate under
consideration became or is to become effective, and any other relevant terms or
conditions applicable to both new and renewing tenants, but in no event less
than the monthly Base Rent prevailing during the last year of the initial Lease
Term or first Extended Term, as applicable.


 


(c) Determination of Fair Market Rent.


 


(i) Negotiation. If Lessee so exercises an
Option to Extend in a timely manner, the parties shall then meet in good faith
to negotiate the Base Rent for the Premises for the Extended Term, during the
first thirty (30) days after the date of the delivery by Lessee of the
Option Notice (the “Negotiation Period”). If, during the Negotiation Period,
the parties agree on the Base Rent applicable to the Premises for the Extended
Term, then such agreed amount shall be the Base Rent payable by Lessee during
the Extended Term.


 


(ii) Arbitration. In the event that the parties
are unable to agree on the Base Rent for the Premises within the Negotiation
Period, then within ten (10) days after the expiration of the Negotiation
Period, each party shall separately designate to the other in writing an
appraiser to make this determination. Each appraiser designated shall be a
member of MAI and shall have at least ten (10) years experience in
appraising commercial real property, of similar quality and use as the
Premises, in San Mateo County. The failure of either party to appoint an
appraiser within the time allowed shall be deemed equivalent to appointing the
appraiser appointed by the other party, who shall then determine the Fair
Market Rent for the Premises for the Extended Term. Within five (5) business
days of their appointment, the two designated appraisers shall jointly
designate a third similarly qualified appraiser. Within thirty (30) days
after their appointment, each of the two appointed appraisers shall submit to
the third appraiser a sealed envelope containing such appointed appraiser’s
good faith determination of the Fair Market Rent for the Premises for the
Extended Term; concurrently with such delivery, each such appraiser shall
deliver a copy of his or her determination to the other appraiser. The third
appraiser shall within ten (10) days following receipt of such
submissions, then determine which of the two appraisers’ determinations most
closely reflects Fair Market Rent as defined above. The determination most
closely reflecting the third appraiser’s determination shall be deemed to be
the Fair Market Rent for the Premises during the Extended Term; the third
appraiser shall have no rights to adjust, amend or otherwise alter the
determinations made by the appraiser selected by the parties, but must select
one or the other of such appraisers’ submissions. The determination by such
third appraiser shall be final and binding upon the parties. Said third
appraiser shall, upon selecting the determination which most closely resembles
Fair Market Rent, concurrently notify both parties hereto. The Base Rent for
the Extended Term in question shall be the determination so selected. The
parties shall share the appraisal expenses equally. If the Extended Term begins
prior to the determination of Fair Market Rent, Lessee shall pay monthly
installments of Base Rent equal to one hundred ten percent (110%) of the
monthly installment of Base Rent in effect for the last year of the initial
Lease Term or the first Extended Term, as applicable, (in lieu of “holdover
rent” payable under Section 17.09(b)). Once a determination is made, any
over payment or under payment shall be reimbursed as a credit against, or paid
by adding to, the monthly installment of Base Rent next falling due.


 


8

















 


ARTICLE IV


RENT: TRIPLE NET LEASE


 


Section 4.01. Base Rent. Lessee shall pay to
Lessor as Base Rent an initial monthly installment of Three Dollars and
twenty-five Cents ($3.25) per square foot of Rentable Area as determined under Section 2.01.,
in advance, on the first day of each calendar month of the Lease Term,
commencing on the Commencement Date. Base Rent for any period during the Lease
Term which is for less than one month shall be a pro rata portion of the
monthly installment (based on the actual days in that month).


 


Section 4.02. Rent Adjustment. The Base Rent
set forth in Section 4.01. above shall be adjusted upward by an annual
compounded increase of three and five tenths percent (3.5%), as of the first
day of the thirteenth (13th) full calendar month following the
Commencement Date and as of the first day of every thirteenth
(13th) calendar month thereafter during the Lease Term, as shown on Exhibit “E”
attached hereto.


 


Section 4.03. First Payment of Base Rent. If
the Commencement Date is other than the first day of a calendar month, the
first installment of Base Rent shall be paid on the first day of the calendar
month immediately succeeding the Commencement Date and shall include pro rata
payment for the calendar month in which the Commencement Date occurs.


 


Section 4.04. Absolute Triple Net Lease. This
Lease is what is commonly called a “Absolute Triple Net Lease,” it being
understood that Lessor shall receive the Base Rent set forth in Section 4.01.
free and clear of any and all expenses, costs, impositions, taxes, assessments,
liens or charges of any nature whatsoever. Lessee shall pay all rent in lawful money
of the United States of America to Lessor at the notice address stated herein
or to such other persons or at such other places as Lessor may designate in
writing on or before the due date specified for same without prior demand,
set-off or deduction of any nature whatsoever. It is the intention of the
parties hereto that this Lease shall not be terminable for any reason by
Lessee, and that except as herein expressly provided in Articles III, VIII and
XIII, concerning delay, destruction and condemnation, Lessee shall in no event
be entitled to any abatement of or reduction in rent payable under this Lease.
Any present or future law to the contrary shall not alter this agreement of the
parties.


 


Section 4.05. Additional Rent.


 


(a) Defined. In addition to the Base Rent
reserved by Section 4.01., Lessee shall pay, as Additional Rent, all
taxes, assessments, fees and other impositions in accordance with the
provisions of Article IX, insurance premiums in accordance with the
provisions of Article VII, operating charges, and Common Area facility use
privilege charges with respect to the amenities/athletic facility (in lieu of
any separate use charge to Lessee’s employees who use said facility the
baseball and soccer fields) as well as, maintenance, repair and replacement
costs and expenses, utility charges, and other costs and charges allocable to
the Common Area and the Common Area facilities and the Outside Areas of the
Premises, all in accordance with the provisions of Article VI and any
other charges, costs and expenses (including appropriate


 


9

















 


reserves
therefor) which are contemplated or which may arise under any provision of this
Lease during the Lease Term, plus a Management Fee to Lessor equal to 4% of the
Base Rent. The Management Fee is due and payable, in advance, with each
installment of Base Rent. All of such charges, costs, expenses, Management Fee
and all other amounts payable by Lessee hereunder, shall constitute Additional
Rent, and upon the failure of Lessee to pay any of such charges, costs or
expenses, Lessor shall have the same rights and remedies as otherwise provided
in this Lease for the failure of Lessee to pay Base Rent. To the extent any of
the aforesaid amounts are fairly allocable to the Common Area or to other
portions of the Project, Lessee’s obligation is to pay only its proportionate
share as determined by Lessor based upon the ratio of the Rentable Area of the
Premises to the Rentable Area of other office and research and development
buildings at the Project that have been approved for development which share is
presently determined to be seventeen percent (17%).


 


(b) Payment. To the extent not paid pursuant to
other provisions of this Lease, and at Lessor’s sole election, Lessor may submit
invoices and Lessee shall pay Lessee’s share of Additional Rent in monthly
installments on the first day of each month in advance in an amount to be
estimated by Lessor, based on Lessor’s experience in managing office/research
and development projects. Within ninety (90) days following the end of the
period used by Lessor in estimating Additional Rent, Lessor shall furnish to
Lessee a statement (hereinafter referred to as “Lessor’s Statement”) of the
actual amount of Lessee’s proportionate share of such Additional Rent for such
period. Within fifteen (15) days thereafter, Lessee shall pay to Lessor,
as Additional Rent, or Lessor shall remit or credit to Lessee, as the case may
be, the difference between the estimated amounts paid by Lessee and the actual
amount of Lessee’s Additional Rent for such period as shown by such statement.
Monthly installments for the ensuing year shall be adjusted upward or downward
as set forth in Lessor’s Statement.


 


Section 4.06. Security Deposit. Within two (2) business
days after the first date when Lessor is both the fee owner of the Property and
has obtained financing in an amount sufficient both to purchase the Property
and to complete the construction of the Building Shell, the offsite and offsite
improvements described in subsection 2.04(j) and to fund the Tenant
Improvement Allowance, Lessee shall deposit with Lessor a Security Deposit
equal to eighteen (18) month’s of Base Rent in the amount of Sixteen
Million, Five Hundred Forty Five Thousand Dollars and no Cents ($16,545,000) in
the form of cash or an unconditional, irrevocable letter of credit without
documents, i.e. no obligation on Lessor’s part to present anything but a sight
draft, with Lessor as beneficiary and providing for payment in San Francisco on
presentation of Lessee’s drafts on sight and drawable in whole or in part San
Francisco and otherwise from a bank and in a form acceptable to Lessor (the
“Security Deposit”). The Security Deposit shall be held by Lessor as security
for the faithful performance by Lessee of all of the terms, covenants, and
conditions of this Lease applicable to Lessee. If Lessee defaults with respect
to any provision of this Lease, including but not limited to the provisions
relating to the condition of the Premises upon Lease Termination, Lessor may
(but shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any amount which Lessor may spend by reason
of Lessee’s default or to compensate Lessor for any loss or damage which Lessor
may suffer by reason of Lessee’s default. If any portion of the Security
Deposit is so used or applied, Lessee shall, within ten days after written
demand therefor, deposit cash (or a replacement Letter of Credit in form and
substance subject to the same requirements as the original Letter of Credit)


 


10

















 


with
Lessor in an amount sufficient to restore the Security Deposit to its original
amount. Lessee’s failure to do so shall be a Default by Lessee. The rights of
Lessor pursuant to this Section 4.06. are in addition to any rights which
Lessor may have pursuant to Article 12 below. If Lessee fully and
faithfully performs every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned (without interest) to
Lessee (or, at Lessor’s option, to the last assignee of Lessee’s interests
hereunder) at Lease expiration or termination and after Lessee has vacated the
Premises. Lessor shall not be required to keep the Security Deposit separate
from Lessor’s general funds or be deemed a trustee of same. If the Security
Deposit is in whole or in part in the form of a Letter of Credit, failure of
Lessee to deliver a replacement Letter of Credit to Lessor at least forty-five
(45) business days prior to the expiration date of any current Letter of
Credit shall constitute a separate default entitling Lessor to draw down
immediately and entirely on the current Letter of Credit and the proceeds shall
constitute a cash Security Deposit.


 


Section 4.07. Lessee’s Right to Review
Supporting Data.


 


(1) Exercise of Right by Lessee. Provided that
Lessee is not in default under this Lease and provided further that Lessee
strictly complies with the provisions of this Paragraph, Lessee shall have the
right to reasonably review supporting data for any portion of a Lessor’s
statement that Lessee claims is incorrect. In order for Lessee to exercise its
right under this Paragraph, Lessee shall, within thirty (30) days after
any such Lessor’s statement is sent, deliver a written notice to Lessor
specifying the portions of the Lessor’s statement that are claimed to be
incorrect, and Lessee shall simultaneously pay to Lessor all amounts due from
Lessee to Lessor as specified in the Lessor’s statement. Except as expressly
set forth in subparagraph 3 below, in no event shall Lessee be entitled to
withhold, deduct, or offset any monetary obligation of Lessee to Lessor under
the Lease including, without limitation, Lessee’s obligation to make all Base
Rent payments and all payments for Additional Rent pending the completion of,
and regardless of the results of, any review under this Paragraph. The right to
review granted to Lessee under this Paragraph may only be exercised once for
any Lessor’s statement, and if Lessee fails to meet any of the above conditions
as a prerequisite to the exercise of such right, the right of Lessee under this
Paragraph for a particular Lessor’s statement shall be deemed waived.


 


(2) Procedures for Review. Lessee acknowledges
that Lessor maintains its records for the Building and Project at its offices
in San Francisco, and Lessee therefore agrees that any review of supporting
data under this Paragraph shall occur at such location. Any review to be
conducted under this Paragraph shall be at the sole expense of Lessee and shall
be conducted by an independent firm of certified public accountants of national
standing. Lessee acknowledges and agrees that any supporting data reviewed
under this Paragraph constitute confidential information of Lessor, which shall
not be disclosed to anyone other than the accountants performing the review and
the principals of Lessee who receive the results of the review. The disclosure
of such information to any other person, whether or not caused by the conduct
of Lessee, shall constitute a material breach of this Lease.


 


(3) Finding of Error. Any errors disclosed by
the review of supporting data under this Paragraph shall be promptly corrected,
provided that Lessor shall have the right to cause another review of the
supporting data to be made by an independent firm of certified public


 


11

















 


accountants
of national standing. In the event of a disagreement between the two accounting
firms, the review that discloses the least amount of deviation from the
Lessor’s statement shall be deemed to be correct and its review shall be final
and binding on both Lessor and Lessee. If the results of the review of
supporting data taking into account, if applicable, the results of any
additional review caused by Lessor reveal that Lessee has overpaid obligations
for a preceding period, the amount of such overpayment shall be credit against
Lessee’s subsequent installment obligations to pay its share of Additional
Rent. In the event that such results show that Lessee has underpaid its
obligations for a preceding period, the amount of such underpayment shall be
paid by Lessee to Lessor with the next succeeding installment obligation of
Additional Rent or, if the Lease has terminated, in cash within thirty
(30) days after the determination of underpayment is delivered to Lessee.
Each party shall pay the cost and expense of its chosen accounting firm.


 


(4) Effect of Lessee’s Default. In the event
that Lessee becomes in default of its obligations under this Lease at any time
during the pendency of a review of records under this Paragraph, said right to
review shall immediately cease and the matters originally set forth in the
Lessor’s statement shall be deemed to be correct.


 


ARTICLE V


USE


 


Section 5.01. Permitted Use and Limitations on
Use. The Premises shall be used and occupied only for office, research and
development, together with such ancillary uses which do not cause excessive
wear of the Premises or increase the potential liability of Lessor, and for no
other use, without Lessor’s prior written consent. Lessee shall not use, suffer
or permit the use of the Premises in any manner that will tend to create waste,
nuisance or unlawful acts. In no event shall it be unreasonable for Lessor to
withhold its consent as to uses which it determines would tend to increase
materially the wear of the Premises or any part thereof or increase the
potential liability of Lessor or decrease the marketability, financability,
leasability or value of the Premises. Lessee shall not do anything in or about
the Premises which will (i) cause structural injury to the Building or
Premises, or (ii) cause damage to any part of the Building except to the
extent reasonably necessary for the installation of Lessee’s trade fixtures and
Lessee’s Alterations, and then only in a manner which has been first approved
by Lessor in writing. Lessee shall not operate any equipment within the
Building or Premises which will (i) materially damage the Building or the
Common Area, (ii) overload existing electrical systems or other mechanical
equipment servicing the Building, (iii) impair the efficient operation of
the sprinkler system or the heating, ventilating or air conditioning (“HVAC”)
equipment within or servicing the Building, or (iv) damage, overload or
corrode the sanitary sewer system. Lessee shall not attach, hang or suspend
anything from the ceiling, roof, walls or columns of the Building or set any
load on the floor in excess of the load limits for which such items are designed
nor operate hard wheel forklifts within the Premises. Any dust, fumes, or waste
products generated by Lessee’s use of the Premises shall be contained and
disposed so that they do not (i) create an unreasonable fire or health
hazard, (ii) damage the Premises, or (iii) result in the violation of
any law. Except as approved by Lessor, Lessee shall not change the exterior of
the Building, or install any equipment or fixtures on or make any penetrations
of the exterior or roof of the Building, provided that Lessee may install
rooftop antennae or other communication devices on the roof of the Building
with Lessor’s prior written consent which shall not be unreasonably


 


12

















 


withheld
or delayed. Lessee shall not conduct on any portion of the Premises any sale of
any kind, including any public or private auction, fire sale,
going-out-of-business sale, distress sale or other liquidation sale. No
materials, supplies, tanks or containers, equipment, finished products or
semifinished products, raw materials, inoperable vehicles or articles of any
nature shall be stored upon or permitted to remain within the outside areas of
the Premises except in fully fenced and screened areas outside the Building
which have been designed for such purpose and have been approved in writing by
Lessor for such use by Lessee.


 


Section 5.02. Compliance with Law.


 


(a) Lessor shall deliver the Premises to Lessee
on the Commencement Date, for office use, free of violations of any covenants or
restrictions of record, or any applicable law, building code, regulation or
ordinance in effect on such Commencement Date, including without limitation,
the Americans with Disability Act, and free of Year Two Thousand computer
programming defects.


 


(b) Except as provided in paragraph 5.02.(a),
Lessee shall, at Lessee’s cost and expense, comply promptly with all statutes,
ordinances, codes, rules, regulations, orders, covenants and restrictions of
record, and requirements applicable to the Premises and Lessee’s use and
occupancy of same in effect during any part of the Lease Term, whether the same
are presently foreseeable or not, and without regard to the cost or expense of
compliance.


 


(c) By executing this Lease, Lessee
acknowledges that it has reviewed and satisfied itself as to its compliance, or
intended compliance with the applicable zoning and permit laws, hazardous
materials and waste requirements, and all other statutes, laws, or ordinances
relevant to the uses stated in Section 5.01., above, provided that Lessor
represents that the Premises, when certified for occupancy, may legally be used
for general office purposes.


 


Section 5.03. Condition of Premises at
Commencement Date. Subject to all of the terms of this Lease for the
construction of Tenant Improvements. Lessor shall deliver the Building to
Lessee on the Commencement Date with the Building plumbing, lighting, heating,
ventilating, air conditioning, gas, electrical, and sprinkler systems and
loading doors as set forth in Exhibit “D” in proper operating condition
and built substantially in accordance with the approved plans therefor, and in
a workmanlike manner. Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Commencement Date,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use and condition of the Premises,
and any covenants or restrictions, liens, encumbrances and title exceptions of
record, and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. Lessee acknowledges that neither
Lessor nor any agent of Lessor has made any representation or warranty as to
the present or future suitability of the Premises for the conduct of Lessee’s
business.


 


Section 5.04. Defective Condition at
Commencement Date. In the event -that it is determined, and Lessee notifies
Lessor in writing within one year after the Commencement Date, that any of the
obligations of Lessor set forth in Section 5.02.(a) or Section 5.03.(a) were
not performed, then it shall be the obligation of Lessor, and the sole right
and remedy of Lessee,


 


13

















 


after
receipt of written notice from Lessee setting forth with specificity the nature
of the failed performance, to promptly, within a reasonable time and at
Lessor’s sole cost, correct same. Except as to defects which remain Lessor’s
responsibility under Section 6.01(b), Lessee’s failure to give such
written notice to Lessor within one year after the Commencement Date shall
constitute a conclusive presumption that Lessor has complied with all of
Lessor’s obligations under the foregoing sections 5.02. and 5.03., and any
required correction after that date shall be performed by Lessee, at its sole
cost and expense. At the end of the first year of the Lease Term, Lessor shall
promptly assign to Lessee all of Lessor’s contractor’s, and/or manufacturer’s
guarantees, warranties, and causes of action which do not relate to Lessor’s
obligations under Section 6.01(b).


 


Section 5.05. Building Security. Lessee
acknowledges and agrees that it assumes sole responsibility for security at the
Premises for its agents, employees, invitees, licensees, contractors, guests
and visitors and will provide such systems and personnel for same including,
without limitation, that portion of the Common Area located on the legal parcel
which the Building is located as it deems necessary or appropriate and at its
sole cost and expense. Lessee acknowledges and agrees that Lessor does not
intend to provide any security system or security personnel at the Premises or
Project, including, without limitation, at the Common Areas provided, however,
that nothing herein shall be deemed to prevent Lessor from providing such
system or personnel in the future, the cost of which will be included in those
items for which Lessee pays Additional Rent.


 


Section 5.06. Rules and Regulations.
Lessor may from time to time promulgate reasonable and nondiscriminatory rules and
regulations applicable for the care and orderly management of the Premises.
Such rules and regulations shall be binding upon Lessor upon delivery of a
copy thereof to Lessor, and Lessor agrees to abide by such rules and
regulations. A copy of the initial Rules and Regulations is attached
hereto as Exhibit “L.” If there is a conflict between the rules and
regulations and any of the provisions of this Lease, the provisions of this
Lease shall prevail. Lessor shall not be responsible for the violation of any
such rules and regulations by any person, including, without limitation,
Lessee or its employees, agents, invitees, licensees, guests, visitors or
contractors.


 


ARTICLE VI


MAINTENANCE, REPAIRS AND ALTERATIONS


 


Section 6.01. Maintenance of Premises.


 


(a) Throughout the Lease Term, Lessee, at its
sole cost and expense, shall keep, maintain, repair and replace the Premises
(except as provided in 6.01.(b)) and all improvements and appurtenances in or
serving the Premises, including, without limitation, all interior and exterior
walls, all doors and windows, the roof membrane, all elevators and stairways,
all wall surfaces and floor coverings, all Tenant Improvements and alterations,
additions and improvements installed during the Lease Term, all sewer,
plumbing, electrical, lighting, heating, ventilation and cooling systems, fire
sprinklers, fire safety and security systems, fixture and appliances and all
wiring and glazing, in the same good order, condition and repair as they are in
on the Commencement Date, or may be put in during the Lease Term, reasonable
wear excepted, provided that wear which could be prevented by first class
maintenance shall not be deemed reasonable.


 


14

















 


(b) Lessor, at its sole cost and expense, shall
repair defects in the Building Shell, including, exterior walls (including all
exterior glass which is damaged by structural defects in such exterior walls),
floors installed as part of the Building Shell, supporting pillars, structural
walls, roof structure and foundations of the Building and sewer and plumbing
systems outside the Building as well as any defects in the offsite and onsite
improvements listed in Section 2.04(i), provided that the need for repair
is not caused by Lessee, in which event Lessor shall repair same, at Lessee’s
sole cost and expense (to the extent not insured) and Lessee shall reimburse
Lessor for same upon demand. Lessor shall replace the roof membrane of the
Building, the parking lot surface, landscaping, drainage, irrigation, sprinkler
and sewer and plumbing systems outside the Building systems when the useful
life of each has expired, and Lessee shall pay that portion of the cost of each
replacement, together with annual interest at the Agreed Rate which shall be
amortized over the useful life of each such replacement applicable to the
balance of the Lease Term, in equal monthly installments due and payable with
installments of Base Rent provided that as to repairs and replacements within
the Common Area, Lessee shall pay its proportionate share. Lessee shall give
Lessor written notice of any need of repairs which are the obligation of Lessor
hereunder and Lessor shall have a reasonable time to perform same. Should
Lessor default as provided in Section 12.03 with respect to its obligation
to make any of the repairs assumed by it hereunder with respect to the
Building, Lessee shall have the right to perform such repairs and Lessor agrees
that within thirty (30) days after written demand accompanied by detailed
invoice(s), it shall pay to Lessee the cost of any such repairs together with
accrued interest from the date of Lessee’s payment at the Agreed Rate. Lessor
shall not be liable to Lessee, its employees, invitees, or licensees for any
damage to person or property, and Lessee’s sole right and remedy shall be the
performance of said repairs by Lessee with right of reimbursement from Lessor
of the reasonable fair market cost of said repairs, not exceeding the sum
actually expended by Lessee, together with accrued interest from the date of
Lessee’s payment at the Agreed Rate, provided that nothing herein shall be
deemed to create a right of setoff or withholding by Lessee of Base Rent or
Additional Rent or any other amounts due herein. Lessee hereby expressly waives
all rights under and benefits of Sections 1941 and 1942 of the California Civil
Code or under any similar law, statute or ordinance now or hereafter in effect
to make repairs and offset the cost of same against rent or to withhold or
delay any payment of rent or any other of its obligations hereunder as a result
of any default by Lessor under this Section 6.01.(b).


 


(c) Lessee agrees to keep the Premises, both
inside and out, clean and in sanitary condition as required by the health,
sanitary and police ordinances and regulations of any political subdivision
having jurisdiction and to remove all trash and debris which may be found in or
around the Premises. Lessee further agrees to keep the interior surfaces of the
Premises, including, without limitation, windows, floors, walls, doors,
showcases and fixtures clean and neat in appearance.


 


(d) If Lessee refuses or neglects to commence
such repairs and/or maintenance for which Lessee is responsible under this Article VI
(including with respect to that portion of the Common Area located on the legal
parcel on which the Building is located) within a thirty (30) day period


 


15














 


(or
as soon as practical and in no event later than five (5) days, if the
failure to initiate the repair threatens to cause further damage to the
Premises) after written notice from Lessor and thereafter diligently prosecute
the same to completion, then Lessor may (i) enter the Premises (except in
an emergency, upon at least 24 hours advanced written notice) during Lessor’s
business hours and cause such repairs and/or maintenance to be made and shall
not be responsible to Lessee for any loss or damage occasioned thereby and
Lessee agrees that upon demand, it shall pay to Lessor the reasonable cost of
any such repairs, not exceeding the sum actually expended by Lessor, together
with accrued interest from the date of Lessor’s payment at the Agreed Rate and (ii) elect
to enter into a maintenance contract at a market rate for first-rate
maintenance with a third party for the performance of all or a part of Lessee’s
maintenance obligations, whereupon, Lessee shall be relieved from its
obligations to perform only those maintenance obligations covered by such
maintenance contract, and Lessee shall bear the entire cost of such maintenance
contract which shall be paid in advance, as Additional Rent, on a monthly basis
with Lessee’s Base Rent payments.


 


Section 6.02. Maintenance of Common
Areas and Outside Areas. Subject to 6.01.(c) and subject to Lessee paying
Lessee’s share of the cost and expense for same pursuant to Section 4.05,
Lessor shall maintain, repair and replace all landscape, hardscape and other
improvements within the Common Areas and shall operate and manage the
amenities/athletic facility and other Common Area features and facilities described
in Section 2.02 and Lessor shall also maintain, repair and replace all
landscape, hardscape and other improvements within the Outside Areas of the
Premises (“Outside Areas”), including without limitation, walkways, driveways,
parking areas and lighting and sprinkler systems.


 


Section 6.03. Alterations, Additions and
Improvements. No alterations, additions, or improvements (“Alterations”) shall
be made to the Premises by Lessee without the prior written consent of Lessor
which Lessor will not unreasonably withhold, provided, however, that Lessee may
make Alterations which do not affect the Building systems, exterior appearance,
structural components or structural integrity and which do not exceed
collectively Seventy-five Thousand Dollars ($75,000) in cost within any twelve
(12) month period, without Lessor’s prior written consent. As a condition
to Lessor’s obligation to consider any request for consent hereunder, Lessee
shall pay Lessor upon demand for the reasonable costs and expenses of third
party consultants, engineers, architects and others for reviewing plans and
specifications and for monitoring the construction of any proposed Alterations.
Lessor may require Lessee to remove any such Alterations at the expiration or
termination of the Lease Term and to restore the Premises to their prior
condition by written notice given on or before the earlier of (i) the expiration
of the Lease Term or (ii) thirty (30) days after termination of the
Lease or (iii) thirty (30) days after a written request from Lessee
for such notice from Lessor provided, that, if Lessee requests same from
Lessor, Lessor will notify Lessee within five (5) business days after
receipt of Lessee’s request and a copy of all plans and specifications for the
proposed Alteration whether it will require removal. All Alterations to be made
to the Premises shall be made under the supervision of a competent, California
licensed architect and/or competent California licensed structural engineer
(each of whom has been approved by Lessor) and shall be made in accordance with
plans and specifications which have been furnished to and approved by Lessor in
writing prior to commencement of work. All Alterations shall be designed,
constructed and installed at the sole cost and expense of Lessee by California
licensed architects, engineers, and


 


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contractors
approved by Lessor, in compliance with all applicable law, and in good and
workmanlike manner. Any Alteration except furniture and trade fixtures, shall
become the property of Lessor at the expiration, or sooner termination of the
Lease, unless Lessor directs otherwise, provided that Lessee shall retain title
to all furniture and trade fixtures placed on the Premises. All heating,
lighting, electrical, air conditioning, full height partitioning (but not
moveable, free standing cubicle-type partitions which do not extend to the
ceiling or connect to Building walls), drapery and carpeting installations made
by Lessee together with all property that has become an integral part of the
Premises, shall be and become the property of Lessor upon the expiration, or
sooner termination of the Lease, and shall not be deemed trade fixtures. Within
thirty (30) days after completion of any Alteration, Lessee, Lessee shall
provide Lessor with a complete set of “as built” plans for same.


 


Section 6.04. Covenant Against Liens.
Lessee shall not allow any liens arising from any act or omission of Lessee to
exist, attach to, be placed on, or encumber Lessor’s or Lessee’s interest in
the Premises or Project, or any portion of either, by operation of law or
otherwise. Lessee shall not suffer or permit any lien of mechanics, material
suppliers, or others to be placed against the Premises or Project, or any
portion of either, with respect to work or services performed or claimed to
have been performed for Lessee or materials furnished or claimed to have been
furnished to Lessee or the Premises. Lessor has the right at all times to post
and keep posted on the Premises any notice that it considers necessary for
protection from such liens. At least seven (7) days before beginning
construction of any Alteration, Lessee shall give Lessor written notice of the
expected commencement date of that construction to permit Lessor to post and
record a notice of nonresponsibility. If any such lien attaches or Lessee
received notice of any such lien, Lessee shall cause the lien to be immediately
released and removed of record. Despite any other provision of this Lease, if
the lien is not released and removed within twenty (20) days after Lessor
delivers notice of the lien to Lessee, Lessor may immediately take all action
necessary to release and remove the lien, without any duty to investigate the
validity of it. All expenses (including reasonable attorney fees and the
cost of any bond) incurred by Lessor in connection with a lien incurred by
Lessee or its removal shall be considered Additional Rent under this Lease and
be immediately due and payable by Lessee.


 


Section 6.05 Reimbursable Capital Expenditures.
Except for items of capital expenditures, which are to be made at Lessor’s sole
cost and expense pursuant to the first sentence of Section 6.01(b) above,
capital expenditures, together with interest thereon at the Agreed Rate, for
any replacement item at the Premises made by Lessor in excess of Ten Thousand
Dollars ($10,000.00) during the Lease Term shall be amortized over the
remaining Lease Term for the useful life of such replacement item within the
numerator being the number of months remaining in the Lease Term and the
denominator being the number of months of the “useful life” of the
improvements. Lessee shall be obligated for such amortized portion of any such
expenditure in equal monthly installments due and payable with each installment
of Base Rent.


 


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ARTICLE VII


INSURANCE


 


Section 7.01. Property/Rental Insurance for
Premises: At all times during the Lease Term, Lessor shall keep the Premises
insured against loss or damage by fire and those risks normally included in the
term “all risk,” including, without limitation, coverage for (i) earthquake
and earthquake sprinkler leakage, (ii) flood, (iii) loss of rents and
extra expense for eighteen (18) months, including scheduled rent
increases, (iv) boiler and machinery, (v) Tenant Improvements and (vi) fire
damage legal liability form, including waiver of subrogation. Any deductibles
shall be paid by Lessee. The amount of such insurance shall not be less than
100% of replacement cost. Insurance shall include a Building Ordinance and
Increased Cost of Construction Endorsement insuring the increased cost of reconstructing
the Premises incurred due to the need to comply with applicable statutes,
ordinances and requirements of all municipal, state and federal authorities now
in force, which or may be in force hereafter. Any recovery received from said
insurance policy shall be paid to Lessor and thereafter applied by Lessor to
the reconstruction of the Premises in accordance with the provisions of Article VIII
below. Lessee, in addition to the rent and other charges provided herein, shall
reimburse Lessor for the cost of the premiums for all such insurance covering
the Premises in accordance with Article IV. Such reimbursement and shall
be made within (15) days of Lessee’s receipt of a copy of Lessor’s
statement therefor. Lessee shall pay to Lessor any deductible (subject to the
above conditions) owing within fifteen (15) days after receipt of notice
from Lessor of the amount owing. To the extent commercially available, Lessor’s
insurance shall have a deductible not greater than fifteen percent
(15%) for earthquake and ten percent (10%) for the basic “all risk”
coverage.


 


Section 7.02. Property Insurance for Fixtures
and Inventory. At all times during the Lease Term, Lessee shall, at its sole
expense, maintain insurance with “all risk” coverage on any fixtures, furnishings,
merchandise equipment or personal property in or on the Premises, whether in
place as of the date hereof or installed hereafter. The amount of such
insurance shall not be less than one hundred percent (100%) of the
replacement cost thereof, and Lessor shall not have any responsibility nor pay
any cost for maintaining any types of such insurance. Lessee shall pay all
deductibles.


 


Section 7.03. Lessor’s Liability Insurance.
During the Lease Term, Lessor shall maintain a policy or policies of comprehensive
general liability insurance naming Lessor (and such others as designated by
Lessor) against liability for bodily injury, property damage on our about the
Project, with combined single limit coverage of not less than Thirty Million
Dollars ($30,000,000.00). Lessee, in addition to the rent and other charges
provided herein, agrees to pay to Lessor Lessee’s proportionate share of the
premium(s) for all such insurance pursuant to Section 4.05. The
insurance premiums shall be paid in accordance with Article IV, within
(15) days of Lessee’s receipt of a copy of Lessor’s statement therefore.


 


Section 7.04. Liability Insurance Carried by
Lessee. At all times during the Lease Term (and any holdover period) Lessee
shall obtain and keep in force a commercial general liability policy of
insurance protecting Lessee, Lessor and any Lender(s) whose names are
provided to Lessee as Additional Insureds against claims from bodily injury,
personal injury and property


 


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damage
based upon involving or arising out of ownership, use, occupancy or maintenance
of the Premises and all areas appurtenant thereto. Such insurance shall be on
an occurrence basis providing a single limit coverage in amount of not less
than Ten Million Dollars ($10,000,000) per occurrence with an Additional
Lessors or Premises Endorsements and containing an “Amendment of the Pollution
Exclusion Endorsement” for damage caused by heat, smoke, fumes from a hostile
fire. The limits of said insurance required by this Lease as carried by Lessee
shall not, however limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance to be carried by the Lessee shall be
primary to and not contributory with, any similar insurance carried by Lessor
whose insurance shall be considered excess insurance only.


 


Section 7.05. Lessee to Furnish Proof of
Insurance. Lessee shall furnish to Lessor prior to the Commencement Date, and
at least thirty (30) days prior to the expiration date of any policy, certificates
indicating that the property insurance and liability insurance required to be
maintained by Lessee is in full force and effect for the twelve (12) month
period following such expiration date; that Lessor has been named as an
additional insured to the extent of contractual liability assumed in Section 7.07.
“Indemnification” and Section 7.08. “Lessor as Party Defendant”; and that
all such policies will not be canceled unless thirty (30) days’ prior
written notice of the proposed cancellation has been given to Lessor. The
insurance shall be with insurers approved by Lessor, provided, however, that
such approval shall not be unreasonably withheld so long as Lessee’s insurance
carrier has a Best’s Insurance Guide rating not less than A+ VIII. Within ten (10) business
days after Lessee’s written request for same, Lessor shall furnish once during
any calendar year, certificates indicating that the property insurance and
liability insurance required to be kept by Lessor is in full force and effect.


 


Section 7.06. Mutual Waiver of Claims and
Subrogation Rights. Lessor and Lessee hereby release and relieve the other, and
waive their entire claim of recovery for loss or damage to property arising out
of or incident to fire, lightning, and the other perils included in a standard “all
risk” insurance policy of a type described in Sections 7.01 and 7.02 above,
when such property constitutes the Premises, or is in, on or about the
Premises, whether or not such loss or damage is due to the negligence of Lessor
or Lessee, or their respective agents, employees, guests, licensees, invitees,
or contractors. Lessee and Lessor waive all rights of subrogation against each
other on behalf of, and shall obtain a waiver of all subrogation rights from,
all property and casualty insurers referenced above.


 


Section 7.07. Indemnification and Exculpation.


 


(a) Except as otherwise provided in Section 7.07.(b),
Lessee shall indemnify and hold Lessor free and harmless from any and all
liability, claims, loss, damages, causes of action (whether in tort or
contract, law or equity, or otherwise), expenses, charges, assessments, fines,
and penalties of any kind, including without limitation, reasonable attorney
fees, expert witness fees and costs, arising by reason of the death or injury of
any person, including any person who is an employee, agent, invitee, licensee,
permittee, visitor, guest or contractor of Lessee, or by reason of damage to or
destruction of any property, including property owned by Lessee or any person
who is an employee, agent, invitee, permitee, visitor, or contractor of Lessee,
caused or allegedly caused (1) while that person or property is in or
about the Premises; (2) by some condition of the Premises; (3) by
some act or omission by Lessee or its agent, employee,


 


19

















 


licensee,
invitee, guest, visitor or contractor or any person in, adjacent, on, or about
the Premises with the permission, consent or sufferance of Lessee; (4) by
any matter connected to or arising out of Lessee’s occupation and use of the
Premises, or any breach or default in timely observance or performance of any
obligation on Lessee’s part to be observed or performed under this Lease.


 


(b) Notwithstanding the provisions of Section 7.07.(a) of
this Lease, Lessee’s duty to indemnify and hold Lessor harmless shall not apply
to any liability, claims, loss or damages arising because of the active
negligence or willful acts of misconduct of Lessor or its agents, employees or
contractors or which is or could be covered by the insurance Lessor is required
to carry under this Lease. Lessor hereby waives all claims against Lessee for
any damage which is or could be covered by the insurance Lessee is required to
carry under this Lease.


 


(c) Lessee hereby waives all claims against
Lessor for damages to goods, wares and merchandise and all other personal
property in, on or about the Premises and for injury or death to persons in, on
or about the Premises from any cause arising at any time to the fullest extent
permitted by law and in no event shall Lessor be liable for lost profits or
other consequential damages arising from any cause or for any damage which is
or could be covered by the insurance Lessee is required to carry under this
Lease.


 


Section 7.08. Lessor as Party Defendant. If by
reason of an act or omission of Lessee or any of its employees, agents,
invitees, licensee, visitors, guests or contractors, Lessor is made a party
defendant or a cross- defendant to any action involving the Premises or this
Lease, Lessee shall hold harmless and indemnify Lessor from all liability or
claims of liability, including all damages, attorney fees and costs of suit.


 


ARTICLE VIII


DAMAGE OR DESTRUCTION


 


Section 8.01. Destruction of the Premises.


 


(a) In the event of a partial destruction of
the Premises during the Lease Term from any cause, Lessor, upon receipt of, and
to the extent of, insurance proceeds paid in connection with such casualty,
shall forthwith repair the same, provided the repairs can be made within a
reasonable time under state, federal, county and municipal applicable law, but
such partial destruction shall in no way annul or void this Lease, (except as
provided in Section 8.01.(b) below) provided that Lessee shall be
entitled to a proportionate credit for rent equal to the payment of Rental
Income Insurance received by Lessor. Lessor shall use diligence in making such
repairs within a reasonable time period, acts of God, strikes and delays beyond
Lessor’s control excepted, in which instance the time period shall be extended
accordingly, and this Lease shall remain in full force and effect, with the
rent to be proportionately reduced as provided in this Section. If the Premises
are damaged by any peril within twelve (12) months prior to the last day
of the Lease Term and, in the reasonable opinion of the Lessor’s architect or
construction consultant, the restoration of the Premises cannot be
substantially completed within ninety (90) days after the date of such
damage and such damage renders unusable more than thirty percent (30%) of
the Premises, Lessor may terminate this Lease on sixty (60) days written
notice to Lessee.


 


20

















 


(b) If the Building is damaged from any cause,
Lessor shall promptly furnish Lessee with the written opinion of Lessor’s
architect of when the restoration work to repair the damage may be complete.
Lessee shall have the option to terminate this Lease if the time estimated to
substantially complete the restoration exceeds fifteen (15) months from
the date Lessor’s architect’s opinion is delivered to Lessee, which shall be (i) exercised
by written notice to Lessor delivered within thirty (30) days after
delivery to Lessee of Lessor’s architect’s opinion or (ii) irrevocably and
automatically waived if not so timely exercised. In the event of termination,
Lessee shall pay to Lessor all insurance proceeds, if any, received by Lessee
as a result of the damage or destruction except to the extent allocable to the
unamortized (over the Lease Term) cost of (i) Tenant Improvements paid for
by Lessee over and above the Tenant Improvement Allowance and (ii) or
other Alterations installed therein at Lessee’s sole cost and expense.


 


Section 8.02. Waiver of Civil Code Remedies.
Lessee hereby expressly waives any rights to terminate this Lease upon damage
or destruction to the Premises, including without limitation any rights
pursuant to the provisions of Section 1932, Subdivisions 1 and 2 and Section 1933,
Subdivision 4, of the California Civil Code, as amended from time-to-time, and
the provisions of any similar law hereinafter enacted.


 


Section 8.03. No Abatement of Rentals. The
Rentals and other charges due under this Lease shall not be reduced or abated
by reason of any damage or destruction to the Premises (except to the extent of
proceeds received by Lessor from the Rental Loss Insurance), and Lessor shall
be entitled to all proceeds of the insurance maintained pursuant to Section 7.01.
above during the period of rebuilding pursuant to Section 8.01.(a) above,
or if the Lease is terminated pursuant to Section 8.01.(a) above.
Lessee shall have no claim against Lessor, including, without limitation, for
compensation for inconvenience or loss of business, profits or goodwill during
any period of repair or reconstruction.


 


Section 8.04. Liability for Personal Property.
In no event shall Lessor have any liability for, nor shall it be required to
repair or restore, any injury or damage to Lessee’s personal property or to any
other personal property or to Alterations (except to the extent Lessor receives
insurance proceeds to repair damage to same) in or upon the Premises by Lessee.


 


ARTICLE IX


REAL PROPERTY TAXES


 


Section 9.01. Payment of Taxes. Lessee shall
pay all real property taxes, including any escaped or supplemental tax and any
form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license, fee, charge, excise or imposition (“real
property taxes”), imposed, assessed or levied on or with respect to the
Premises (and Lessee shall pay its proportionate share of real property taxes
imposed, assessed or levied on or with respect to the Common Area) by any
Federal, State, County, City or other political subdivision or public authority
having the direct or indirect power to tax, including, without limitation, any
improvement district or any community facilities district, as against any legal
or equitable


 


21

















 


interest
of Lessor in the Premises or against the Premises or any part thereof applicable
to the Premises for a period of time included within the Lease Term as well as
any government or private cost sharing agreement assessments made for the
purpose of augmenting or improving the quality of services and amenities
normally provided by government agencies. All such payments shall be made at
least ten (10) days prior to the delinquency date for such payment or ten (10) days
after Lessee’s receipt of the tax bill, whichever is later. Notwithstanding the
foregoing, Lessee shall not be required to pay any net income taxes, franchise
taxes, or any succession or inheritance taxes of Lessor. If any anytime during
the Lease Term, the State of California or any political subdivision of the
state, including any county, city, city and county, public corporation,
district, or any other political entity or public corporation of this state,
levies or assesses against Lessor a tax, fee, charge or imposition, excise on
rents under the Lease, the square footage of the Premises, the act of entering
into this Lease, or the occupancy of Lessee, or levies or assesses against
Lessor any other tax, fee, or excise, however described, including, without
limitation, a so-called value added, business license, transit, commuter,
environmental or energy tax fee, charge or excise or imposition related to the
Premises as a direct substitution in whole or in part for, or in addition to,
any real property taxes on the Premises, Lessee shall pay ten (10) days
before delinquency or ten (10) days after receipt of the tax bill,
whichever is later, that tax, fee, charge, excise or imposition. A good faith
estimate of anticipated real property taxes is attached hereto as Exhibit M.


 


Section 9.02. Pro Ration for Partial Years. If
any such taxes paid by Lessee shall cover any period prior to the Commencement
Date or after the Expiration Date of the Lease Term, Lessee’s share of such
taxes shall be equitably prorated to cover only the period of time within the
tax fiscal year during which this Lease shall be in effect, and Lessor shall
reimburse Lessee to any extent required. If Lessee shall fail to pay any such
taxes, Lessor shall have the right to pay the same in which case Lessee shall
repay such amount to Lessor within ten (10) days after written demand,
together with interest at the Agreed Rate.


 


Section 9.03. Personal Property Taxes.


 


(a) Lessee shall pay prior to delinquency all
taxes imposed, assessed against and levied upon trade fixtures, furnishings,
equipment and all other personal property of Lessee contained in the Premises
or elsewhere. When possible, Lessee shall cause said trade fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Lessor.


 


(b) If any of Lessee’s said personal property
shall be assessed with Lessor’s real property, Lessee shall pay Lessor the
taxes attributable to Lessee within ten (10) days after receipt of a
written statement setting forth the taxes applicable to Lessee’s property.


 


(c) If Lessee shall fail to pay any such taxes,
Lessor shall have the right to pay the same, in which case Lessee shall repay
such amount to Lessor with Lessee’s next rent installment together with
interest at the Agreed Rate.


 


Section 9.04. Lessee’s Right to Contest Real
Property Taxes. Lessee at its sole cost and expense shall have the right, at
any time, to seek a reduction in the assessed valuation of the


 


22

















 


Premises
or to contest any real property taxes that are to be paid by Lessee with
respect to the Premises. If Lessee seeks a reduction or contests any such real
property taxes, the failure on Lessee’s part to pay such real property taxes
shall not constitute a default as long as Lessee complies with the provisions
of this Section. Lessor shall not be required to join in any proceeding or
contest brought by Lessee unless the provisions of any law require that the
proceeding or contest be brought by or in the name of Lessor or any owner of
the Premises. In that case Lessor shall join in the proceeding or contest or
permit it to be brought in Lessor’s name as long as Lessor is not required to
bear any cost or expense. Lessor, on final determination of the proceeding or
contest, shall immediately pay or discharge any decision or judgment rendered,
together with all costs, fees, charges, interest, penalties and all other
amounts incidental to the decision or judgment. If Lessor does not pay the real
property taxes when due and Lessor seeks a reduction or contests them as
provided in this Section, before the commencement of such proceeding or contest
Lessee shall furnish to Lessor a surety bond issued by an insurance company
qualified to do business in California provided that said bond and company are
both reasonably satisfactory to Lessor. The amount of the bond shall equal one
hundred thirty three percent (133%) of the total amount of real property
taxes in dispute. The bond shall hold Lessor and the Premises harmless from any
damage arising out of the proceeding or contest and shall insure the payment of
any judgment that may be rendered.


 


ARTICLE X


UTILITIES


 


Section 10.01. Lessee to Pay. Lessee shall pay
prior to delinquency and throughout the Lease Term, all charges for water, gas,
heating, cooling, sewer, telephone, electricity, garbage, air conditioning and
ventilation, janitorial service, landscaping and all other materials and
utilities supplied to the Premises. The disruption, failure, lack or shortage
of any service or utility due to any cause whatsoever shall not affect any
obligation of Lessee hereunder, and Lessor shall faithfully keep and observe
all the terms, conditions and covenants of this Lease and pay all rent due
hereunder, all without diminution, credit or deduction, provided that, Lessor
shall credit Lessee to the extent of any rental interruption proceeds Lessor
receives as a result of such disruption, failure, lack or shortage of services
or utility.


 


ARTICLE XI


ASSIGNMENT AND SUBLETTING


 


Section 11.01. Lessor’s Consent Required.
Except as provided in Section 11.02, Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, license or otherwise
transfer or encumber all or any part of Lessee’s interest in this Lease or in
the Premises or any part thereof, without Lessor’s prior written consent which
Lessor shall not unreasonably withhold or delay. Lessor shall respond in
writing to Lessee’s request for consent hereunder in a timely manner and any
attempted assignment, transfer, mortgage, encumbrance, subletting or licensing
without such consent shall be void, and shall constitute a breach of this
Lease. By way of example, but not limitation, reasonable grounds for denying
consent include: (i) poor credit history or insufficient financial
strength of transferee (but not necessarily financial strength as great as that
of Lessee), (ii) transferee’s intended use of the Premises is inconsistent
with the permitted use or will materially and adversely affect Lessor’s
interest. Lessee shall 


 


23

















 


reimburse
Lessor upon demand for Lessor’s reasonable costs and expenses (including
attorneys’ fees, architect fees and engineering fees) involved in renewing any
request for consent whether or not consent is granted.


 


Section 11.02. Lessee Affiliates. Lessee may
assign or sublet the Premises, or any portion thereof, to any corporation which
controls, is controlled by, or is under common control with Lessee, or to any
corporation resulting from the merger or consolidation with Lessee, or to any
person or entity which acquires all, or substantially all of the assets of
Lessee as a going concern of the business that is being conducted on the
Premises (“Affiliate”), provided that said assignee or sublessee assumes, in
full, the obligations of Lessee under this Lease and provided further that the
use to which the Premises will be put does not materially change. Any such
assignment shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease.


 


Section 11.03. No Release of Lessee. Regardless
of Lessor’s consent, no subletting or assignment shall release Lessee of Lessee’s
obligation or alter the primary liability of Lessee to pay the rent and to
perform all other obligations to be performed by Lessee hereunder. The
acceptance of rent by Lessor from any other person shall not be deemed consent
to any subsequent assignment or subletting. In the event of default by any
assignee of Lessee or any successor of Lessee, in the performance of any of the
terms hereof, Lessor may proceed directly against Lessee without the necessity
of exhausting remedies against said assignee.


 


Section 11.04. Excess Rent. In the event Lessor
shall consent to a sublease or an assignment, Lessee shall pay to Lessor with
its regularly scheduled Base Rent payments, fifty percent (50%) of all sums
and the fair market value of all consideration collected or received by Lessee
from a sublessee or assignee which are in excess of the Base Rent and
Additional Rent due and payable with respect to the subject space pursuant to Article IV
for the time period encompassed by the sublease or assignment term, after first
deducting reasonable leasing commissions and the cost of any Tenant
Improvements paid by Lessee with respect to such sublease or assignment.


 


Section 11.05. No Impairment of Security.
Lessee’s written request to Lessor for consent to an assignment or subletting
or other form of transfer shall be accompanied by (a) the name and legal
composition of the proposed transferee; (b) the nature of the proposed
transferee’s business to be carried on in the Premises; (c) the terms and
provisions of the proposed transfer agreement; and (d) such financial and
other reasonable information as Lessor may request concerning the proposed
transferee.


 


Section 11.06. Lessor’s Recapture Rights.


 


(a) Lessor’s Recapture Rights. Notwithstanding
any other provision of this Article 11, in the event that Lessee proposes
to sublease or assign or otherwise transfer (to anyone other than an Affiliate)
any interest in this Lease or the Premises or any part thereof affecting
(collectively with all other such subleases, assignments, or transfers then in
effect) more than fifty percent (50%) of the square footage of the
Rentable Area of the Building (“Recapture Space”) for the major portion of the
then remaining Lease Term, then Lessor shall have the option to recapture the
Recapture Space by written notice to Lessee (“Recapture Notice”) given within
ten (10)


 


24

















 


business
days after Lessor receives any notice of such proposed assignment or sublease
or other transfer (“Transfer Notice”). A timely Recapture Notice terminates
this Lease for the Recapture Space, effective as of the date specified in the
Transfer Notice. If Lessor declines or fails timely to deliver a Recapture
Notice, Lessor shall have no further right under this Section 11.06 to the
Recapture Space unless it becomes available again after transfer by Lessee.


 


(b) Consequences of Recapture. To determine the
new Base Rent under this Lease if Lessor recaptures the Recapture Space, the
then current Base Rent (immediately before Lessor’s recapture) under the Lease
shall be multiplied by a fraction, numerator of which is the square feet of the
Rentable Area retained by Lessee after Lessor’s recapture and the denominator
of which is the total square feet of the Rentable Area before Lessor’s
recapture. The Additional Rent, to the extent that it is calculated on the
basis of the square feet within the Building, shall be reduced to reflect
Lessee’s proportionate share based on the square feet of the Building retained
by Lessee after Lessor’s recapture. This Lease as so amended shall continue
thereafter in full force and effect. Either party may require written
confirmation of the amendments to this Lease necessitated by Lessor’s recapture
of the Recapture Space. If Lessor recaptures the Recapture Space, Lessor shall,
at Lessor’s sole expense, construct, paint, and furnish any partitions required
to segregate the Recapture Space from the remaining Premises retained by
Lessee.


 


ARTICLE XII


DEFAULTS; REMEDIES


 


Section 12.01. Defaults. The occurrence of any
one or more of the following events shall constitute a material default and
breach of this Lease by Lessee:


 


(a) The vacation of the Premises by Lessee for
a period of time which would thereafter terminate Lessor’s insurance coverage
at the Premises or cause an increase of Lessor’s insurance coverage at the
Project or which for a period of more than six consecutive calendar months
(other than vacation caused by damage or destruction and during the repair of
same) or the commission of waste at the Premises or the making of an assignment
or subletting in violation of Article XI;


 


(b) The failure by Lessee to make any payment
of rent or any other payment required to be made by Lessee hereunder, as and
when due, if such failure continues for a period of five (5) business days
after written notice thereof from Lessor to Lessee. In the event that Lessor
serves Lessee with a Notice to Pay Rent or Quit in the form required by
applicable Unlawful Detainer statutes such Notice shall constitute the notice
required by this paragraph, provided that the cure period stated in the Notice
shall be five (5) business days rather than the statutory three (3) days;


 


(c) Lessee’s failure to provide (i) any
instrument or assurance as required by Section 7.05 or (ii) estoppel
certificate as required by Section 15.01 or (iii) any document
subordinating this Lease to a Lender’s deed of trust if such failure continues
for five (5) business days after written notice of the failure. In the
event Lessor serves Lessee with a Notice to Perform Covenant or Quit in the
form required by applicable Unlawful Detainer Statutes, such Notice shall
constitute the notice required by this paragraph, provided that the cure period
stated in the Notice shall be five (5) business days rather than the
statutory three (3) days;


 


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(d) The failure by Lessee to observe or perform
any of the covenants, conditions or provisions of this Lease to be observed or
performed by Lessee, other than described in paragraph (a) (b) or (c) above,
if such failure continues for a period of ten (10) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee’s default is such that more than ten (10) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commences such cure within said ten (10) day period and thereafter
diligently prosecutes such cure to completion;


 


(e) (i) The making by Lessee of any
general arrangement or assignment for the benefit of creditors; (ii) the
filing by Lessee of a voluntary petition in bankruptcy under Title 11 U.S.C. or
the filing of an involuntary petition against Lessee which remains uncontested
for a period of sixty days; (iii) the appointment of a trustee or receiver
to take possession of substantially all of Lessee’s assets located at the
Premises or of Lessee’s interest in this Lease; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee’s assets
located at the Premises or of Lessee’s interest in this Lease, provided,
however, in the event that any provisions of this Section 12.01(e) is
contrary to any applicable law, such provision shall be of no force or effect;


 


(f) The discovery by Lessor that any financial
statement given to Lessor by Lessee, or any guarantor of Lessee’s obligations
hereunder, was materially false.


 


Section 12.02. Remedies. In the event of any
such material default and breach by Lessee, Lessor may at any time thereafter,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such default and breach:


 


(a) Terminate Lessee’s right to possession of
the Premises by any lawful means including by way of unlawful detainer (and
without any further notice if a notice in compliance with the unlawful detainer
statutes and in compliance with paragraphs (b), (c) and (d) of Section 12.01
above has already been given), in which case this Lease shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee all damages incurred
by Lessor by reason of Lessee’s default including, but not limited to, (i) the
cost of recovering possession of the Premises including reasonable attorney’s
fees related thereto; (ii) the worth at the time of the award of any
unpaid rent that had been earned at the time of the termination, to be computed
by allowing interest at the Agreed Rate but in no case greater than the maximum
amount of interest permitted by law, (iii) the worth at the time at the
time of the award of the amount by which the unpaid rent that would have been
earned between the time of the termination and the time of the award exceeds
the amount of unpaid rent that Lessee proves could reasonably have been
avoided, to be computed by allowing interest at the Agreed Rate but in no case
greater than the maximum amount of interest permitted by law, (iv) the
worth at the time of the award of the amount by which the unpaid rent for the
balance of the Lease Term after the time of the award exceeds the amount of
unpaid rent that Lessee proves could reasonably have been avoided, to be
computed by discounting that amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of the award plus one per cent (1%), (v) any
other amount necessary to compensate Lessor for all the detriment proximately
caused by Lessee’s failure to perform obligations under


 


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this
Lease, including brokerage commissions and advertising expenses, expenses of
remodeling the Premises for a new tenant (whether for the same or a different
use), and any special concessions made to obtain a new tenant, and (vi) any
other amounts, in addition to or in lieu of those listed above, that may be
permitted by applicable law.


 


(b) Maintain Lessee’s right to possession as
provided in Civil Code Section 1951.4 in which case this Lease shall
continue in effect whether or not Lessee shall have abandoned the Premises. In
such event Lessor shall be entitled to enforce all of Lessor’s rights and
remedies under this Lease, including the right to recover the rent as it
becomes due hereunder.


 


(c) Pursue any other remedy now or hereafter
available to Lessor under the laws or judicial decisions of the state of
California. Unpaid amounts of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the Agreed Rate.


 


Section 12.03. Default by Lessor. Lessor shall
not be in default under this Lease unless Lessor fails to perform obligations
required of Lessor within a reasonable time, but in no event later than thirty
(30) days after written notice by Lessee to Lessor and to the holder of
any first mortgage or deed of trust covering the Premises whose name and
address shall have theretofore been furnished to Lessee in writing, specifying
that Lessor has failed to perform such obligation; provided, however, that if
the nature of Lessor’s obligation is such that more than thirty (30) days
are required for performance then Lessor shall not be in default if Lessor
commences performance within such thirty day period and thereafter diligently
prosecutes the same to completion. In the event Lessor does not commence
performance within the thirty (30) day period provided herein, Lessee may
perform such obligation and will be reimbursed for its expenses by Lessor
together with interest thereon at the Agreed Rate. Lessee waives any right to
terminate this Lease or to vacate the Premises on Lessor’s default under this
Lease. Lessee’s sole remedy on Lessor’s default is an action for damages or
injunctive or declaratory relief. Notwithstanding the foregoing, nothing herein
shall be deemed applicable in the event of Lessor’s delay in delivery of the
Premises. In that situation, all rights and remedies shall be determined under Section 3.01
above.


 


Section 12.04. Late Charges. Lessee hereby
acknowledges that late payment by Lessee to Lessor of rent and other sums due
hereunder will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Lessor by the terms of any mortgage or trust
deed covering the Premises. Accordingly, if any installment of rent or any
other sum due from Lessee shall not be received by Lessor or Lessor’s
designated agent by the later of two (2) days after written notice of such
failure is given or five (5) days after such amount is due and owing,
Lessee shall pay to Lessor a late charge equal to ten percent (10%) of
such overdue amount. The parties hereby agree that such late charge represents
a fair and reasonable estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee’s default with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of rent, then rent shall
automatically become due and payable quarterly in advance, rather than monthly,
notwithstanding Section 4.01 or any other provision of this Lease to the
contrary.


 


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Section 12.05. Impounds. In the event that a
late charge is payable hereunder, whether or not collected, for three (3) installments
of rent or any other monetary obligation of Lessee under the terms of this
Lease within a twelve (12) month period, Lessee shall pay to Lessor, if
Lessor shall so request in writing, in addition to any other payments required
under this Lease, a monthly advance installment, payable at the same time as
the monthly rent, as estimated by Lessor, for real property tax and insurance
expenses on the Premises which are payable by Lessee under the terms of this
Lease. Such fund shall be established to insure payment when due, before
delinquency, of any or all such real property taxes and insurance premiums. If
the amounts paid to Lessor by Lessee under the provisions of this paragraph are
insufficient to discharge the obligations of Lessee to pay such real property
taxes and insurance premiums as the same become due, Lessee shall pay to
Lessor, upon Lessor’s demand, such additional sums necessary to pay such
obligations. All moneys paid to Lessor under this paragraph may be intermingled
with other moneys of Lessor and shall not bear interest. In the event of a
default in the obligations of Lessee to perform under this Lease, then any
balance remaining from funds paid to Lessor under the provisions of this
paragraph may, at the option of Lessor, be applied to the payment of any
monetary default of Lessee in lieu of being applied to the payment of real
property tax and insurance premiums.


 


ARTICLE XIII


CONDEMNATION OF PREMISES.


 


Section 13.01. Total Condemnation. If the
entire Premises, whether by exercise of governmental power or the sale or
transfer by Lessor to any condemnor under threat of condemnation or while
proceedings for condemnation are pending, at any time during the Lease Term,
shall be taken by condemnation such that there does not remain a portion
suitable for occupation, this Lease shall then terminate as of the date
transfer of possession is required. Upon such condemnation, all rent shall be
paid up to the date transfer of possession is required, and Lessee shall have
no claim against Lessor or the award for the value of the unexpired portion of
this Lease Term.


 


Section 13.02. Partial Condemnation. If any
portion of the Premises is taken by condemnation during the Lease Term, whether
by exercise of governmental power or the sale for transfer by Lessor to an
condemnor under threat of condemnation or while proceedings for condemnation
are pending, this Lease shall remain in full force and effect except that in
the event a partial taking leaves the Premises unfit for the conduct of the
business of Lessee, then Lessee shall have the right to terminate this Lease
effective upon the date transfer of possession is required. Moreover, Lessor
shall have the right to terminate this Lease effective on the date transfer of
possession is required if more than thirty-three percent (33%) of the
total square footage of the Premises is taken by condemnation. Lessee and
Lessor may elect to exercise their respective rights to terminate this Lease
pursuant to this Section by serving written notice to the other within
thirty (30) days after receipt of notice of condemnation. All rent shall
be paid up to the date of termination, and Lessee shall have no claim against
Lessor for the value of any unexpired portion of the Lease Term. If this Lease
shall not be canceled, the rent after such


 


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partial
taking shall be that percentage of the adjusted base rent specified herein,
equal to the percentage which the square footage of the untaken part of the
Premises, immediately after the taking, bears to the square footage of the
entire Premises immediately before the taking. If Lessee’s continued use of the
Premises requires alterations and repair by reason of a partial taking, all
such alterations and repair shall be made by Lessee at Lessee’s expense. Lessee
waives all rights it may have under California Code of Civil Procedure Section 1265.130
or otherwise, to terminate this Lease based on partial condemnation.


 


Section 13.03. Award to Lessee. In the event of
any condemnation, whether total or partial, Lessee shall have the right to
claim and recover from the condemning authority such compensation as may be
separately awarded or recoverable by Lessee for loss of its business fixtures,
or equipment belonging to Lessee immediately prior to the condemnation. The
balance of any condemnation award shall belong to Lessor (including, without
limitation, any amount attributable to any excess of the market value of the
Premises for the remainder of the Lease Term over the then present value of the
rent payable for the remainder of the Lease Term) and Lessee shall have no
further right to recover from Lessor or the condemning authority for any claims
arising out of such taking, provided that Lessee shall have the right to make a
separate claim in the condemnation proceeding, as long as the award payable to
Lessor is not reduced thereby, for (i) the taking of the unamortized or
undepreciated value of any leasehold improvements owned by Lessee that Lessee
has the right to remove at the end of the Lease Term and that Lessee elects not
to remove, (ii) reasonable removal and relocation costs for any leasehold
improvements that Lessee has the right to remove and elects to remove (if
condemnor approves of the removal), and (iii) relocation costs under
Government Code section 7262, the claim for which Lessee may pursue by separate
action independent of this Lease.


 


ARTICLE XIV


ENTRY BY LESSOR


 


Section 14.01. Entry by Lessor Permitted.
Lessee shall permit Lessor and its employees, agents and contractors to enter
the Premises and all parts thereof (i) upon twenty-four (24) hours
notice (or without notice in an emergency), including without limitation, the
Building and all parts thereof at all reasonable times for any of the following
purposes: to inspect the Premises; to maintain the Premises; to make such
repairs to the Premises as Lessor is obligated or may elect to make pursuant to
Section 6.01(d); to make repairs, alterations or additions to any other
portion of the Project and (ii) upon twenty-four (24) hours notice to
show the Premises and post “To Lease” signs for the purposes of reletting
during the last twelve (12) months of the Lease Term (provided that Lessee
has failed to exercise its option to extend) or extended


 


Lease Term to
show the Premises as part of a prospective sale by Lessor or to post notices of
nonresponsibility. Lessor shall have such right of entry without any rebate of
rent to Lessee for any loss of occupancy or quiet enjoyment of the Premises
hereby occasioned. Lessee shall have the right to accompany Lessor on any
entry, provided that Lessor shall not be required to give Lessee any notice of
an emergency entry and shall not be required to delay any noticed entry to accommodate
Lessee’s exercise of its right to so accompany.


 


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ARTICLE XV


ESTOPPEL CERTIFICATE


 


Section 15.01. Estoppel Certificate.


 


(a) Either party shall at any time upon not
less than fifteen (15) days’ prior written request from the other party
execute, acknowledge and deliver to the other party a statement in writing (i) certifying,
if true, that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying, if true, that
this Lease, as so modified, is in full force and effect) and the date to which
the rent and other charges are paid in advance, if any, and (ii) acknowledging,
if true, that there are not, to such party’s knowledge, any uncured defaults on
the part of the other party hereunder, or specifying such defaults if any are
claimed and (iii) certifying or acknowledging such other matters as are
requested by any prospective lender or buyer which are reasonably related to
the loan or sale transaction. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises.


 


(b) Either party’s failure to deliver such
statement within such time shall be conclusive upon the other party (i) that
this Lease is in full force and effect, without modification except as may be
represented by the requesting party in the statement, (ii) that there are
no uncured defaults in requesting party’s performance, and (iii) that not
more than one month’s rent has been paid in advance.


 


ARTICLE XVI


LESSOR’S LIABILITY


 


Section 16.01. Limitations on Lessor’s
Liability. The term “Lessor” as used herein shall mean only the owner or owners
at the time in question of the fee title of the Premises. In the event of any
transfer of such title or interest, Lessor herein named (and in case of any
subsequent transfers then the grantor) shall be relieved from and after the
date of such transfer of all liability as respects Lessor’s obligations
thereafter to be performed, provided that any funds in the hands of Lessor or
the then grantor at the time of such transfer, in which Lessee has an interest,
shall be delivered to the grantee. The obligations contained in this Lease to
be performed by Lessor shall, subject as aforesaid, be binding on Lessor’s
successors and assigns, only during their respective periods of ownership. For
any breach of this Lease by Lessor, the liability of Lessor (including all
persons and entities that comprise Lessor, and any successor Lessor) and any
recourse by Lessee against Lessor shall be limited to (i) the interest of
Lessor, and Lessor’s successors in interest, in and to the Premises including
any sales proceeds or condemnation awards received by Lessor from the sale or
condemnation of the Premises after said breach and (ii) any insurance
coverage pertaining to such breach provided by policies caused pursuant to this
Lease. On behalf of itself and all persons claiming by, through, or under
Lessee, Lessee expressly waives and releases Lessor and each member, agent and
employee of Lessor from any personal liability for breach of this Lease.


 


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ARTICLE XVII


GENERAL PROVISIONS


 


Section 17.01. Severability. The invalidity of
any provision of this Lease as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.


 


Section 17.02. Agreed Rate Interest on Past-Due
Obligations. Except as expressly herein provided, any amount due to either
party not paid when due shall bear interest at the Bank of America prime rate
plus one percent (1%) (“Agreed Rate”). Payment of such interest shall not
excuse or cure any default by Lessee under this Lease. Despite any other
provision of this Lease, the total liability for interest payments shall not
exceed the limits, if any, imposed by the usury laws of the State of
California. Any interest paid in excess of those limits shall be refunded to
the payor by application of the amount of excess interest paid against any sums
outstanding in any order that payee requires. If the amount of excess interest
paid exceeds the sums outstanding, the portion exceeding those sums shall be
refunded in cash to the payor by the payee. To ascertain whether any interest
payable exceeds the limits imposed, any nonprincipal payment (including late
charges) shall be considered to the extent permitted by law to be an expense or
a fee, premium, or penalty rather than interest.


 


Section 17.03. Time of Essence. Time is of the
essence in the performance of all obligations under this Lease.


 


Section 17.04. Additional Rent. Any monetary
obligations of Lessee to Lessor under the terms of this Lease shall be deemed
to be Additional Rent and Lessor shall have all the rights and remedies for the
nonpayment of same as it would have for nonpayment of Base Rent, except that
the one year requirement of Code of Civil Procedure Section 1161(2) shall
apply only to scheduled installments of Base Rent and not to any Additional
Rent. All references to “rent” (except specific references to either Base Rent
or Additional Rent) shall mean Base Rent and Additional Rent.


 


Section 17.05. Incorporation of Prior
Agreements, Amendments and Exhibits. This Lease (including Exhibits A, B, C, D,
E, F, G, H, I, J, K and L) contains all agreements of the parties with respect
to any matter mentioned herein. No prior agreement or understanding pertaining
to any such matter shall be effective. This Lease may be modified in writing
only, signed by the parties in interest at the time of the modification. Except
as otherwise stated in this Lease, Lessee hereby acknowledges that neither the
Lessor nor any employees or agents of the Lessor has made any oral or written
warranties or representations to Lessee relative to the condition or use by
Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable
laws and regulations in effect during the Lease Term except as otherwise
specifically stated in this Lease. Neither party has been induced to enter into
this Lease by, and neither party is relying on, any representation or warranty
outside those expressly set forth in this Lease.


 


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Section 17.06. Notices. -


 


(a) Written Notice. Any notice required or
permitted to be given hereunder shall be in writing and shall be given by a
method described in paragraph (b) below and shall be addressed to Lessee
or to Lessor at the addresses noted below, next to the signature of the
respective parties, as the case may be. Either party may by notice to the other
specify a different address for notice purposes. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee, but delay or failure of delivery to
such person shall not affect the validity of the delivery to Lessor or Lessee.


 


(b) Methods of Delivery:


 


(i) When personally delivered to the recipient,
notice is effective on delivery. Delivery to the person apparently designated
to receive deliveries at the subject address is personally delivered if made
during business hours (e.g. receptionist).


 


(ii) When mailed by certified mail with return
receipt requested, notice is effective on receipt if delivery is confirmed by a
return receipt.


 


(iii) When delivery by overnight delivery
Federal Express/Airborne/United Parcel Service/DHL WorldWide Express with
charges prepaid or charged to the sender’s account, notice is effective on
delivery if delivery is confirmed by the delivery service.


 


(c) Refused, Unclaimed or Undeliverable
Notices. Any correctly addressed notice that is refused, unclaimed, or
undeliverable because of an act or omission of the party to be notified shall
be considered to be effective as of the first date that the notice was refused,
unclaimed, or considered undeliverable by the postal authorities, messenger, or
overnight delivery service.


 


Section 17.07. Waivers. No waiver of any
provision hereof shall be deemed a waiver of any other provision hereof or of
any subsequent breach of the same or any other provisions. Any consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
consent to or approval of any subsequent act. The acceptance of rent hereunder
by Lessor shall not be a waiver of any preceding breach by Lessee of any
provision hereof, other than the failure of Lessee to pay the particular rent
so accepted, regardless of Lessor’s knowledge of such preceding breach at the
time of acceptance of such rent.


 


Section 17.08. Recording. Either Lessor or
Lessee shall, upon request of the other, execute, acknowledge and deliver to
the other a “short form” memorandum of this Lease for recording purposes, provided
that Lessee shall also simultaneously execute in recordable form and delivering
to Lessor a Quit Claim Deed as to its leasehold and any other interest in the
Premises and hereby authorizes Lessor to date and record the same only upon the
expiration or sooner termination of this Lease.


 


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Section 17.09. Surrender of Possession; Holding
Over. -


 


(a) At the expiration of the Lease, Lessee
agrees to deliver up and surrender to Lessor possession of the Premises and all
improvements thereon broom clean and, in as good order and condition as when
possession was taken by Lessee, excepting only ordinary wear and tear (wear and
tear which could have been avoided by first class maintenance practices and in
accordance with industry standards shall not be deemed “ordinary”). Upon
expiration or sooner termination of this Lease, Lessor may reenter the Premises
and remove all persons and property therefrom. If Lessee shall fail to remove
any personal property which it is entitled or obligated to remove from the
Premises upon the expiration or sooner termination of this Lease, for any cause
whatsoever, Lessor, at its option, may remove the same and store or dispose of
them, and Lessee agrees to pay to Lessor on demand any and all expenses
incurred in such removal and in making the Premises free from all dirt, litter,
debris and obstruction, including all storage and insurance charges. If the
Premises are not surrendered at the end of the Lease Term, Lessee shall
indemnify Lessor against loss or liability resulting from delay by Lessee in so
surrendering the Premises, including, without limitation, actual damages for
lost rent and with respect to any claims of a successor occupant.


 


(b) If Lessee, with Lessor’s prior written consent,
remains in possession of the Premises after expiration of the Lease Term and if
Lessor and Lessee have not executed an express written agreement as to such
holding over, then such occupancy shall be a tenancy from month to month at a
monthly Base Rent equivalent to one hundred fifty percent (150%) of the
monthly rental in effect immediately prior to such expiration, such payments to
be made as herein provided for Base Rent. In the event of such holding over,
all of the terms of this Lease, including the payment of Additional Rent all
charges owing hereunder other than rent shall remain in force and effect on
said month to month basis.


 


Section 17.10. Cumulative Remedies. No remedy
or election hereunder by -Lessor shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity, provided
that notice and cure periods set forth in Article XII are intended to
extend and modify statutory notice provisions to the extent expressly stated in
Section 12.01.


 


Section 17.11. Covenants and Conditions. Each
provision of this Lease to be observed or performed by Lessee shall be deemed
both a covenant and a condition.


 


Section 17.12. Binding Effect; Choice of Law.
Subject to any provisions hereof restricting assignment or subletting by Lessee
and subject to the provisions of Article XVI, this Lease shall bind the
parties, their personal representatives, successors and assigns. This Lease
shall be governed by the laws of the State of California and any legal or
equitable action or proceeding brought with respect to the Lease or the
Premises shall be brought in Santa Clara County, California.


 


Section 17.13. Lease to be Subordinate. Lessee
agrees that this Lease is and shall be, at all times, subject and subordinate
to the lien of any mortgage or other encumbrances which Lessor may create
against the Premises including all renewals, replacements and extensions
thereof provided, however, that regardless of any default under any such
mortgage or


 


33

















 


encumbrance
or any sale of the Premises under such mortgage, so long as Lessee timely
performs all covenants and conditions of this Lease and continues to make all
timely payments hereunder, this Lease and Lessee’s possession and rights
hereunder shall not be disturbed by the mortgagee or anyone claiming under or
through such mortgagee. Lessee shall execute any documents subordinating this
Lease within ten (10) days after delivery of same by Lessor so long as the
Lender agrees therein that this Lease will not be terminated if Lessee is not
in default following a foreclosure, including, without limitation, any
Subordination Non-Distribution and Attornment Agreement (“SNDA”) which is
substantially in the form attached hereto as Exhibit “F.”


 


Section 17.14. Attorneys’ Fees. If either party
herein brings an action to enforce the terms hereof or to declare rights
hereunder, the prevailing party in any such action, on trial or appeal, shall
be entitled to recover its reasonable attorney’s fees, expert witness fees and
costs as fixed by the Court.


 


Section 17.15. Signs. Lessee shall not place
any sign upon the exterior of the Building without Lessor’s prior written
consent, which consent shall not be unreasonably withheld and which consent is
hereby given to the signage described in Exhibit “G” hereto. Lessee, at
its sole cost and expense, after obtaining Lessor’s prior written consent,
shall install, maintain and remove prior to expiration of this Lease (or within
ten (10) days after any earlier termination of this Lease) all signage in
full compliance with (i) all applicable law, statutes, ordinances and
regulations and (ii) all provisions of this Lease concerning alterations.


 


Section 17.16. Merger. The voluntary or other
surrender of this Lease by Lessee, or a mutual cancellation thereof, or a
termination by Lessor, shall not work a merger, and shall, at the option of
Lessor, terminate all or any existing subtenancies or may, at the option of
Lessor, operate as an assignment to Lessor of any or all of such subtenancies.


 


Section 17.17. Guarantor. [Intentionally
Omitted]


 


Section 17.18. Quiet Possession. Upon Lessee
timely paying the rent for the Premises and timely observing and performing all
of the covenants, conditions and provisions on Lessee’s part to be observed and
performed hereunder, Lessee shall have quiet possession of the Premises for the
entire Lease Term, subject to all of the provisions of this Lease.


 


Section 17.19. Easements. Lessor reserves to
itself the right, from time to time, to grant such easements, rights and
dedications that Lessor deems necessary or desirable, and to cause the
recordation of Parcel Maps and conditions, covenants and restrictions, so long
as such easements, rights, dedications, Maps and conditions, covenants and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee shall sign any of the aforementioned or other documents, and
take such other actions, which are reasonably necessary or appropriate to
accomplish such granting recordation and subordination of the Lease to same,
upon request of Lessor, and failure to do so within ten (10) business days
of a written request to do so shall constitute a material breach of this Lease.


 


34

















 


Section 17.20. Authority. Each individual
executing this Lease on behalf of a corporation, limited liability company or
partnership represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of such entity in accordance with a
duly adopted resolution of the governing group of the entity empowered to grant
such authority, and that this Lease is binding upon said entity in accordance
with its terms. Each party shall provide the other with a certified copy of its
resolution within ten (10) days after execution hereof, but failure to do
so shall in no manner (i) be evidence of the absence of authority or (ii) affect
the representation or warranty.


 


Section 17.21. Force Majeure Delays. In any
case where either party hereto is required to do any act (other than the
payment of money), delays caused by or resulting from Acts of God or Nature,
war, civil commotion, fire, flood or other casualty, labor difficulties,
shortages of labor or materials or equipment, government regulations, delay by
government or regulatory agencies with respect to approval or permit process,
unusually severe weather, or other causes beyond such party’s reasonable
control the time during which act shall be completed, shall be deemed to be extended
by the period of such delay, whether such time be designated by a fixed date, a
fixed time or “a reasonable time.”


 


Section 17.22. Hazardous Materials.


 


(a) Definition of Hazardous Materials and
Environmental Laws. “Hazardous Materials” means any (a) substance,
product, waste or other material of any nature whatsoever which is or becomes
listed regulated or addressed pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. sections 9601, et seq.
(“CERCLA”); the Hazardous Materials Transportation Act (“HMTA”) 49 U.S.C.
section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
section 6901, et seq. (“RCRA”); the Toxic Substances Control Act, 15 U.S.C.
sections 2601, et seq. (“TSCA”); the Clean Water Act, 33 U.S.C. sections 1251,
et seq.; the California Hazardous Waste Control Act, Health and Safety Code
sections 25100, et seq.; the California Hazardous Substances Account Act,
Health and Safety Code sections 26300, et seq.; the California Safe Drinking
Water and Toxic Enforcement Act, Health and Safety Code sections 25249.5, et
seq.; California Health and Safety Code sections 25280, et seq.; (Underground
Storage of Hazardous Substances); the California Hazardous Waste Management
Act, Health and Safety Code sections 25170.1, et seq.; California Health and
Safety Code sections 25501. et seq. (Hazardous Materials Response Plans and
Inventory); or the Porter-Cologne Water Quality Control Act, California Water
Code sections 13000, et seq., all as amended, or any other federal, state or
local statute, law, ordinance, resolution, code, rule, regulation, order or
decree regulating, relating to or imposing liability (including, but not
limited to, response, removal and remediation costs) or standards of conduct or
performance concerning any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter may be in effect (collectively,
“Environmental Laws”); (b) any substance, product, waste or other material
of any nature whatsoever whose presence in and of itself may give rise to
liability under any of the above statutes or under any statutory or common law
theory based on negligence, trespass, intentional tort, nuisance, strict or
absolute liability or under any reported decisions of a state or federal court,
(c) petroleum or crude oil, including but not limited to petroleum and
petroleum products contained within regularly operated motor vehicles and (d) asbestos.


 


35

















 


(b) Lessor’s Representations and Disclosures.
Lessor represents that it has provided Lessee with a description of the
Hazardous Materials on or beneath the Property as of the date hereof, attached
hereto as Exhibit I and incorporated herein by reference. Lessee
acknowledges that in providing the attached Exhibit I, Lessor has
satisfied its obligations of disclosure pursuant to California Health &
Safety Code Section 25359.7 which requires:


 


“Any owner of nonresidential real property who
knows, or has reasonable cause to believe, that any release of hazardous
substances has come to be located on or beneath that real property shall, prior
to the sale, lease or rental of the real property by that owner, give written
notice of that condition to the buyer, lessee or renter of the real property.”


 


(c) Use of Hazardous Materials. Lessee shall
not cause or permit any Hazardous Materials to be brought upon, kept or used
in, on or about the Project by Lessee, its agents, employees, contractors,
licensees, guests, visitors or invitees without the prior written consent of
Lessor. Lessor shall not unreasonably withhold such consent so long as Lessee
demonstrates to Lessor’s reasonable satisfaction that such Hazardous Materials
are necessary or useful to Lessee’s business and will be used, kept and stored
in a manner that complies with all applicable Environmental Laws. Lessee shall,
at all times, use, keep, store, handle, transport, treat or dispose all such
Hazardous Materials in or about the Property in compliance with all applicable
Environmental Laws. Prior to the expiration or earlier termination of the
Lease, Lessee shall remove from the Project all Hazardous Materials used or
brought onto the Premises during the Lease Term by anyone other than Lessor,
its agents, employees or contractors.


 


(d) Lessee’s and Lessor’s Environmental
Indemnities. Lessee agrees to indemnify and hold Lessor harmless from any
liabilities, losses, claims, damages, penalties, fines, attorney fees, expert
fees, court costs, remediation costs, investigation costs, or other expenses
resulting from or arising out of the use, storage, treatment, transportation,
release, presence, generation, or disposal of Hazardous Materials on, from or
about the Project, and/or subsurface or ground water, after the Commencement
Date from an act or omission of Lessee (or Lessee’s successor), its agents,
employees, invitees, vendors, contractors, guests or visitors. Lessor agrees to
indemnify and hold Lessee harmless from any liabilities, losses, claims,
damages, penalties, fines, attorney fees, expert fees, court costs, remediation
costs, investigation costs, or other expenses resulting from or arising out of
the use, storage, treatment, transportation, release, presence, generation, or
disposal of Hazardous Materials on, from or about the Premises, and/or
subsurface or ground water, after the Commencement Date from an act or omission
of Lessor (or Lessor’s successor), its agents or employees.


 


(e) Lessee’s Obligation to Promptly Remediate.
If the presence of Hazardous Materials on the Premises after the Commencement
Date results from an act or omission of Lessee (or Lessee’s successors), its
agents, employees, invitees, vendors, contractors, guests, or visitors results
in contamination or deterioration of the Premises or Project or any water or
soil beneath the Premises or Project, Lessee shall promptly take all action
necessary or appropriate to investigate and remedy that contamination, at its
sole cost and expense, provided that Lessor’s consent to such action shall
first be obtained. Lessor’s consent shall not be unreasonably withheld.


 


36

















 


(f) Notification. Lessor and Lessee each agree
to promptly notify the other of any communication received from any
governmental entity concerning Hazardous Materials or the violation of
Environmental Laws that relate to the Premises.


 


Section 17.23. Modifications Required by
Lessor’s Lender. If any lender of Lessor requires a modification of this Lease
that will not increase Lessee’s cost or expense or materially and adversely
change Lessee’s rights and obligations, this Lease shall be so modified and
Lessee shall execute whatever documents are required by such lender and deliver
them to Lessor within ten (10) days after the request.


 


Section 17.24. Brokers. Lessor and Lessee each
represents to the other that it has had no dealings with any real estate broker
or agent in connection with the negotiation of this Lease, except for the real
estate brokers or agents identified on the signature page hereof (“Brokers”)
and that they know of no other real estate broker or agent who is entitled to a
commission or finder’s fee in connection with this Lease. Each party shall
indemnify, protect, defend, and hold harmless the other party against all
claims, demands, losses, liabilities, lawsuits, judgments, and costs and
expenses (including reasonable attorney fees) for any leasing commission,
finder’s fee, or equivalent compensation alleged to be owning on account of the
indemnifying party’s dealings with any real estate broker or agent other than
the Brokers. The terms of this Section 17.24 shall survive the expiration
or earlier termination of the Lease Term.


 


Section 17.25. Right of First Offer to Lease
Building 10.


 


(a) During the Lease Term, Lessee shall have a
right of first offer (“Right of First Offer”) to lease the adjacent Building 10
as shown on Exhibit A (“Building 10”) subject to Paragraphs (b) through
(g).


 


(b) At the time Lessee exercises the Right of
First Offer: (i) The Lease must be in full force and effect; (ii) Lessee
shall not be in Default under the Lease; nor shall Lessee be in Default under
the Lease at the Commencement Date (defined in paragraph g(1)) for the Offer
Building, (defined in Paragraph c); and (iii) Lessee’s then current
financial condition, as revealed by its most recent financial statements (which
shall include quarterly and annual financial statements, including income
statements, balance sheets, and cash flow statements), must demonstrate that
either: (1) Lessee’s net worth is at least equal to its net worth at the
time this Lease was signed; or (2) Lessee meets the financial criteria
reasonably acceptable to Lessor.


 


(c) Lessor shall not lease Building10 to
another lessee unless and until Lessor has first offered Building 10 to Lessee
in writing (the “Offer Notice”) and Lessee either rejects such offer or a
period of ten (10) business days has elapsed from the date that Lessor has
delivered the Offer Notice without Lessee having notified Lessor in writing of
its acceptance of such Offer Notice and supplied Lessor with current financial
statements pursuant to Paragraph b(3), which ever event occurs first. The Offer
Notice shall contain the following information: (i) The date on which the
Lessor expects Building 10 to become available; (ii) The Base Rent; (iv) The
pro rata share of Additional Rent; and (v) Such other terms and conditions
upon which Lessor wishes to lease Building 10.


 


37

















 


(d) If Lessee timely delivers to Lessor, in
accordance with the conditions of this Section, written notice of Lessee’s
exercise of the Right of First Offer (along with Lessee’s financial statements
pursuant to Paragraph b(3)) and Lessor determines that Lessee meets all of the
conditions provided in this Section, then Building 10 shall be deemed added to
the Premises and subject to the then applicable terms and conditions in the
Lease, as modified by the terms and conditions set forth in the Offer Notice.


 


(e) If Lessee declines or fails to duly and
timely exercise its Right of First Offer or fails to meet all of the conditions
provided in this Section, Lessor shall thereafter be free to lease the Building
10 in portions or in its entirety to any third-party tenant at any time without
regard to the restrictions in this Section 17.25 and on whatever terms and
conditions Lessor may decide in its sole discretion, without again complying
with all the provisions of this Section 17.25.


 


(f) Within ten (10) business days after
the Commencement Date for the Offer Building, Lessor and Lessee shall confirm
the foregoing in a written amendment to the Lease.


 


(g) This Right of First Offer is personal to
the Lessee and shall become null and void upon the occurrence of an assignment
of the Lease or a sublet of all or a major part of the Premises.


 


Section 17.26. Acknowledgment of Notices.
Lessor has provided and Lessee hereby acknowledges receipt of the Notices
attached as Exhibits J and K hereto, concerning the presence of certain uses
and operations of neighboring parcels of land.


 


Section 17.27. List of Exhibits.


 


	
   

  	
   

  	
  Ref. Page

  
	
  EXHIBIT
  A: Real Property Legal Description, Site Plan, and Building Elevations

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  B: Plans and Specifications for Shell Building

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  C: Work Letter Agreement for Tenant Improvements and Interior Specification
  Standards

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  D: Cost Responsibilities of Lessor and Lessee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  E: Memorandum of Commencement of Lease Term and Schedule of Base Rent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  F: SNDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  G: Signage Exhibit

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  H: Guaranty of Lease [Intentionally Omitted]

  	
   

  	
   

  



 


38

















 


	
  EXHIBIT
  I: Hazardous Materials Disclosure

  
	
   

  
	
  EXHIBIT
  J: Notice to Tenants

  
	
   

  
	
  EXHIBIT
  K: Notice to Tenants

  
	
   

  
	
  EXHIBIT
  L: Rules and Regulations

  
	
   

  
	
  EXHIBIT
  M: Estimate of Real Property Taxes

  



 


39

















 


LESSOR
AND LESSEE EACH HAS CAREFULLY READ AND HAS REVIEWED THIS LEASE AND BEEN ADVISED
BY LEGAL COUNSEL OF ITS OWN CHOOSING AS TO EACH TERM AND PROVISION CONTAINED
HEREIN AND, BY EXECUTION OF THIS LEASE, SHOWS ITS INFORMED AND VOLUNTARY
CONSENT THERETO. EACH PARTY HEREBY AGREE THAT, AT THE TIME THIS LEASE IS
EXECUTED, THE TERMS AND CONDITIONS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.


 


Executed at San Jose, California, as of the
reference date.


 


 


	
  LESSOR:

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Jay Paul

  	
   

  	
  c/o
  Jay Paul Company

  
	
   

  	
  Jay
  Paul, President

  	
   

  	
  353
  Sacramento Street, Suite 1740

  
	
   

  	
   

  	
  San
  Francisco, California 94111

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With
  a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Thomas
  G. Perkins, Esq.

  
	
   

  	
   

  	
  99
  Almaden Blvd., 8th Floor

  
	
   

  	
   

  	
  San
  Jose, CA 95113

  
	
   

  	
   

  	
  Telephone:
  408-993-9911

  
	
   

  	
   

  	
  Facsimile:
  408-286-3312

  
	
   

  	
   

  	
   

  
	
  LESSEE:

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  
	
  Phone.Com, Inc.

  	
   

  	
   

  
	
  a
  California corporation

  	
   

  	
   

  
	
   

  	
   

  	
  (Before
  Commencement Date)

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Alain Rossmann

  	
   

  	
  Pacific
  Shores Center

  
	
   

  	
  (Type
  or print name)

  	
   

  	
  Building
  9

  
	
  Its:

  	
   

  	
   

  	
  Redwood
  City, CA

  
	
   

  	
   

  	
   

  	
  (After
  Commencement Date)

  



 


40

















 


LESSOR
AND LESSEE EACH HAS CAREFULLY READ AND HAS REVIEWED THIS LEASE AND BEEN ADVISED
BY LEGAL COUNSEL OF ITS OWN CHOOSING AS TO EACH TERM AND PROVISION CONTAINED
HEREIN AND, BY EXECUTION OF THIS LEASE, SHOWS ITS INFORMED AND VOLUNTARY
CONSENT THERETO. EACH PARTY HEREBY AGREE THAT, AT THE TIME THIS LEASE IS
EXECUTED, THE TERMS AND CONDITIONS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.


 


Executed at San Jose, California, as of the
reference date.


 


 


	
  LESSOR:

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jay Paul

  	
   

  	
  c/o Jay Paul
  Company

  
	
   

  	
  Jay Paul,
  President

  	
   

  	
  353
  Sacramento Street, Suite 1740

  
	
   

  	
   

  	
  San
  Francisco, California 94111

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Thomas G.
  Perkins, Esq.

  
	
   

  	
   

  	
  99 Almaden
  Blvd., 8th Floor

  
	
   

  	
   

  	
  San Jose, CA
  95113

  
	
   

  	
   

  	
  Telephone:
  408-993-9911

  
	
   

  	
   

  	
  Facsimile:
  408-286-3312

  
	
   

  	
   

  	
   

  
	
  LESSEE:

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  
	
  Phone.Com, Inc.

  	
   

  	
   

  
	
  a California
  corporation

  	
   

  	
   

  
	
   

  	
   

  	
  (Before
  Commencement Date)

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Alain Rossmann

  	
   

  	
  Pacific
  Shores Center

  
	
   

  	
  (Type or print name)

  	
   

  	
  Building 9

  
	
  Its:

  	
   

  	
   

  	
  Redwood City,
  CA

  
	
   

  	
   

  	
   

  	
  (After
  Commencement Date)

  



 


BROKER EXECUTION


 


By signing below, the indicated real estate broker
or agent is not being made a party hereto, but is signifying its agreement with
the provisions hereof concerning brokerage.


 


 


	
  LESSOR’S
  BROKER:

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  
	
  Cornish & Carey
  Commercial

  	
   

  	
  2804 Mission College
  Boulevard

  
	
   

  	
   

  	
   

  	
  Suite 120

  
	
  By:

  	
   

  	
   

  	
  Santa Clara, California
  95054

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Type or print name)

  	
   

  	
   

  
	
  Its:

  	
  Executive Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LESSEE’S
  BROKER:

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  
	
  Wayne Mascia

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Type or print name)

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  



 


41














 


EXHIBIT A


TO


PACIFIC
SHORES CENTER LLC


LEASE


TO


PHONE.COM,
INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


REAL
PROPERTY LEGAL DESCRIPTION,


SITE PLAN
AND BUILDING ELEVATIONS


 


(See Attached)


 


[MAP Page 1]


 


[MAP Page 2]


 

















 


EXHIBIT B


TO


PACIFIC
SHORES CENTER LLC


LEASE


TO


PHONE.COM,
INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


SHELL
BUILDING PLANS AND SPECIFICATIONS


 


(To be provided)


 


NOTE:
Shell Building Plans and Specifications shall be consistent with DES Development
Progress Plans dated February 7, 2000 for (a) exterior skin and (b) structural
steel.


 

















 


EXHIBIT C


TO


PACIFIC
SHORES CENTER LLC


LEASE


TO


PHONE.COM,
INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


WORK LETTER
AGREEMENT FOR TENANT IMPROVEMENTS


AND
INTERIOR SPECIFICATION STANDARDS


 


This
agreement supplements the above referenced Lease executed concurrently herewith
and is as follows:


 


1. Lessee shall devote such time and may be
necessary to enable Lessor to complete and obtain by the respective dates
specified in Section 2.04(d) of the Lease Lessee’s written approval,
and approval by appropriate government authorities, of the final Working
Drawings. The Working Drawings, as they may be modified or provided herein,
shall be prepared by Lessor in accordance with the design specified by Lessee
and reasonably approved by Lessor. Lessee shall be responsible for the
suitability, for Lessee’s needs and business, of the design and function of all
Tenant Improvements. All improvements to be constructed by Lessor as shown on
the Working Drawings, standard or special, shall be defined as “Tenant
Improvements.” All Tenant Improvements materials shall be of a quality equal to
or greater than the quality of materials described on the Interior Specification
Standards attached hereto as Schedule One.


 


2. Lessor shall cause General Contractor to complete
the construction of the Tenant Improvements in a good and workmanlike manner
and in substantial accordance with the Working Drawings. Lessor shall not, however,
be responsible for procuring or installing in the Premises any trade fixtures,
equipment, furniture, furnishings, telephone equipment or other personal
property (“Personal Property”) to be used in the Premises by Lessee, and the
cost of such Personal Property shall be paid by Lessee. Lessee shall conform to
all Project standards in installing any Personal Property and shall be subject
to any and all rules of the site during construction.


 


3. Payment for the Tenant Improvements shall be
pursuant to Section 2.04(g) of the Lease.


 


4. Lessee shall, by signing the Working
Drawings within the time set forth in Section 2.04(d) of the Lease,
give Lessor authorization to complete the Tenant Improvements in accordance
with such Working Drawings. If Lessee shall request any change, addition or
alteration in the approved Working Drawings, Lessor shall promptly give Lessee
a written estimate of the cost of engineering and design services to prepare a
change order (the “Change Order”) in accordance with such request and the time
delay expected because of such request. If


 


1

















 


Lessee,
in writing, approves such written estimate, Lessor shall have the Change Order
prepared and Lessee shall concurrently reimburse Lessor for the cost thereof.
Promptly upon the completion of such Change Order, Lessor shall notify Lessee
in writing of the cost and delay which will be chargeable to Lessee by reason
of such change, addition or deletion. Lessee shall within three (3) business
days notify Lessor in writing whether it desires to proceed with such change,
addition or deletion, and in the absence of such written authorization, the
Change Order will be deemed canceled and Lessee shall be chargeable with any
delay in the completion of the Premises resulting from the processing of such
Change Order, including the three (3) business day approval period.


 


5. If the completion of the Tenant Improvements in
the Premises is delayed (i) at the request of Lessee, (ii) by Lessee’s
failure to comply with the foregoing provisions, (iii) by changes in the
work ordered by Lessee or by extra work ordered by Lessee, or (iv) because
Lessee chooses to have additional work performed by Lessor, then Lessee shall
be responsible for all costs and any expenses occasioned by such delay
including, without limitation, any costs and expenses attributable to increases
in labor or materials; and there shall be no delay in the commencement of
Lessee’s obligation to pay Rent because of Lessor’s failure to complete the Tenant
Improvements on time and any such delay in completion shall constitute Lessee
Delay for purposes of Section 3.01(a) of the Lease.


 


Each person executing this Work Letter Agreement
certifies that he or she is authorized to do so on behalf of and as the act of
the entity indicated.


 


Executed as of
            , at
Mountain View (Santa Clara County), California..


 


 


	
  PACIFIC
  SHORES CENTER LLC

  	
  PHONE.COM, Inc.

  	
   

  
	
   

  	
  a
  California corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Jay Paul

  	
  By:

  	
  /s/
  Alain Rossmann

  
	
   

  	
  Jay
  Paul

  	
   

  	
  (Type
  or print name)

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Manager

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  (Type
  or print name)

  
	
   

  	
   

  	
  Its:

  	
   

  
					



 


2

















 


SCHEDULE
ONE


TO


EXHIBIT C


TO


PACIFIC
SHORES CENTER LLC


LEASE


TO


PHONE.COM,
INC.


FOR


Pacific
Shores Center


Building 9


Redwood City,
California


 


INTERIOR
SPECIFICATION STANDARDS


 


ABBREVIATED
BUILDING STANDARDS


 


For Pacific
Shores


 


GENERAL OFFICE


 


CUSTOM CABINETRY


 


SCOPE: All materials and
labor for the construction and installation of Cabinetry and all related
accessories per WIC Standards.


 


A.
Trade Standards: Woodworking Institute of California (WIC) latest edition Section 15
and 16 for plastic laminated casework and plastic laminated countertops. Color
of plastic laminate to be selected by Architect.


 


B.
All cabinetry to be constructed to “Custom-Grade” Specifications. Cabinetry to
be flush overlay construction.


 


C.
Plastic Laminate: High Pressure thermoset laminated plastic surfacing material
to equal or surpass NEMA LD3, Nevamar, WilsonArt or approved equal.


 


1. Countertops, shelf-tops,
splashes, and edges: Grade GP 50, 0.050 inches thick.


 


2. All other exposed
vertical surfaces: Grade GP 28, 0.028 inches thick


 


3. Semi-exposed backing
sheet: Grade CI, 20, 0.020 inches thick


 


4. Concealed backing sheet:
Grade BK 20, 0.020 inches thick D. Adhesives: Bond surfaces to Type 11 as
recommended by Plastic Laminate Manufacturer.


 


1

















 


E.
Hinges: Heavy-duty concealed self-closing hinges. Amount of hinges per Door per
WIC. Stanley or approved equal


 


F.
Door and Drawer Pulls: Wire-pull with 4-inch centers; Dull chrome finish;
Stanley 4483 or approved equal.


 


G.
Drawer slides: Heavy-duty grade with ball-bearings. Stanley, Klein or approved
equal


 


H.
Door Catches: Heavy-duty commercial friction type.


 


I.
Recessed Adjustable Shelf Standards: Aluminum or zinc-plated recessed type;
Knape & Vogt with clips or approved equal. J. Base and Wall Cabinets
including doors: 3/4-inch thick medium-density particleboard;


 


1. Conceal all fastenings.


 


2. Provide clear spaces as required for mechanical
and electrical fittings


 


3. Plastic laminate and self-edge all shelves.


 


4. Provide 3/4-inch thick doors and drawer faces.


 


5. Unless indicated otherwise, all shelving to be
adjustable.


 


6. Provide back and ends on all cabinets.


 


7. All exposed cabinet faces to be plastic
laminated.


 


K.
Countertops and Shelving: 3/4-inch thick medium density particleboard.
Backsplash to be 3/4 inches thick, glued and screwed into top with scribed
edges. Joints in countertop to be not closer that 24 inches from sinks. Joints
shall be shop fitted, spined, glued and mechanically fastened.


 


L.
Installation of Cabinetry shall be per WIC instructions, Custom Grade.


 


WOOD DOORS


 


SCOPE:
All materials and labor necessary for the installation of Wood Doors, required
accessories and preparations for hardware.


 


A.
Non-rated Wood Doors: 1 3/4 inch thick, flush, solid core, plain sliced
Birch veneer with Birch edge. Cores may be either of the following: Glued block
Hardwood Core per NWMA or Particleboard Core per NWMA. Manufacturer: Algoma,
Weyerhaeuser, or approved equal.


 


B.
Fire-rated Wood Doors: 1 3/4 inch thick, flush, solid core, plain sliced
Birch face veneer with Birch Edge with mineral core per rating. Manufacturer:
Algoma, Weyerhaeuser, or approved equal. Doors shall have a permanent UL label.


 


C.
Vision Panels (where applies): Fire rated vision panel where required. Set in
square metal stop to match metal doorstops as provided by doorframe
manufacturer.


 


D.
Doors shall be 8’-0” x 3’-0” leafs typical.


 


ALUMINUM DOOR AND WINDOW FRAMES


 


SCOPE:
All materials and labor necessary for the installation of Aluminum Door Frames.


 


A.
Frame Manufacturers: Raco, or Ragland Manufacturing Company, Inc.


 


2

















 


B.
Door Frames: Non-rated and 20-minute label, Raco “Trimstyle” frame with Trim
700 (3/8 inch by 1 1/2 inch) with no exposed fasteners.


 


C.
Finish, Door and Window Frame Extrusions, Wall Trim:


 


1. Painted and oven-cured with “Duralaq” finish.


 


2. Color: Clear.


 


3. Finish shall meet or exceed requirements of AAMA
Specifications 603.


 


4. Coat inside of frame profile with bituminous
coating to a thickness of 1/16 inch where in contact with dissimilar materials.


 


DOOR HARDWARE


 


SCOPE:
All materials and labor for the installation of all Door Hardware, locksets,
closers, hinges, miscellaneous door hardware.


 


A.
Swinging Door Lockset and Cylinder: Schlage “L” series with lever handle with 6
pin cylinder.


 


B.
Keyway: Furnish blank keyways to match existing master-key system. Match
existing keyways.


 


C.
Finishes: Satin Chrome, 626 finish. Paint closers to match.


 


D.
Kickplates: 16 gauge stainless steel; 10 inches high: width to equal door width
less 2 inches.


 


HARDWARE SCHEDULE


 


	
  Hardware
  Group A (Typical, rated, single door)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Lockset

  	
   

  	
  Schlage

  	
   

  	
  L9050PD

  
	
  1 1/2

  	
   

  	
  pair Butt Hinges

  	
   

  	
  Hager

  	
   

  	
  BB1279

  
	
  1

  	
   

  	
  Closer

  	
   

  	
  Norton

  	
   

  	
  700
  Series

  
	
  1

  	
   

  	
  Stop

  	
   

  	
  Quality

  	
   

  	
  (332
  @ carpet)

  
	
  1

  	
   

  	
  Smoke
  Seal

  	
   

  	
  Pemko

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardware
  Group B (Typical, rated, closet/service door)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Lockset

  	
   

  	
  Schlage

  	
   

  	
  L9080PD

  
	
  1 1/2

  	
   

  	
  pair
  Butt hinges

  	
   

  	
  Hager

  	
   

  	
  BB1279

  
	
  1

  	
   

  	
  Closer

  	
   

  	
  Norton

  	
   

  	
  700
  Series w/ hold-open

  
	
  1

  	
   

  	
  Stop

  	
   

  	
  Quality

  	
   

  	
  (332
  @ carpet)

  
	
  1

  	
   

  	
  Smoke
  Seal

  	
   

  	
  Pemko

  	
   

  	
   

  



 


3

















 


	
  Hardware
  Group C (Typical, non-rated door)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Lockset

  	
   

  	
  Schlage

  	
   

  	
  L9050PD

  
	
  1 1/2

  	
   

  	
  pair Butt hinges

  	
   

  	
  Hager

  	
   

  	
  BB1279

  
	
  1

  	
   

  	
  Stop

  	
   

  	
  Quality

  	
   

  	
  (332
  @ carpet)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardware Group D (Typical, non-rated, closet/service door)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Lockset

  	
   

  	
  Schlage

  	
   

  	
  L9080PD

  
	
  1 1/2

  	
   

  	
  pair
  Butt hinges

  	
   

  	
  Hager

  	
   

  	
  BB1279

  
	
  1

  	
   

  	
  Stop

  	
   

  	
  Quality

  	
   

  	
  (332
  @ carpet)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardware
  Group E (Card-access door)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Electric Lockset

  	
   

  	
  Schlage

  	
   

  	
  L9080PDGU

  
	
  1 1/2

  	
   

  	
  pair
  Butt hinges

  	
   

  	
  Hager

  	
   

  	
  BB1279
  - NRP (2 pr @ 8’ door)

  
	
  1

  	
   

  	
  Electric
  Butt

  	
   

  	
  Hager

  	
   

  	
   

  
	
  1

  	
   

  	
  Closer

  	
   

  	
  Norton

  	
   

  	
  700
  Series w/ hold-open

  
	
  1

  	
   

  	
  Stop

  	
   

  	
  Quality

  	
   

  	
  (332
  @ carpet)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardware
  Group F (typical, double door)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Electric
  Lockset

  	
   

  	
  Schlage

  	
   

  	
  L9050PD

  
	
  3

  	
   

  	
  pair
  Butt hinges

  	
   

  	
  Hager

  	
   

  	
  BB1270

  
	
  1

  	
   

  	
  Auto
  Flush Bolt

  	
   

  	
  Glyn Johnson

  	
   

  	
  FB-8

  
	
  1

  	
   

  	
  Dustproof Strike

  	
   

  	
  Glyn
  Johnson

  	
   

  	
  DP2

  
	
  2

  	
   

  	
  Closer

  	
   

  	
  Norton

  	
   

  	
  700
  Series

  
	
  2

  	
   

  	
  Stop

  	
   

  	
  Quality

  	
   

  	
  (332
  @ carpet)

  
	
  1

  	
   

  	
  Astragal

  	
   

  	
  Pemko

  	
   

  	
   

  
	
  1

  	
   

  	
  Coordinator

  	
   

  	
  Glyn
  Johnson

  	
   

  	
   

  
	
  1

  	
   

  	
  Smoke
  Seal

  	
   

  	
  Pemko

  	
   

  	
   

  



 


GLAZING


 


SCOPE:
All materials and labor for the installation of Glass.


 


A.
Manufacturers: PPG Industries, or Viracom, Inc. See glazing schedule
below.


 


B.
Shop prepares all glazing. Edges to have no chips or fissures.


 


C.
Glazing Materials:


 


1. Safety Glass: ASTM C1048,
fully tempered with horizontal tempering. Condition A uncoated, Type 1
transparent flat, Class 1 clear, Quality q3 glazing select, conforming to
ANSI Z97.1


 


2. Mirror Glass: Clear float
type with copper and silver coating, organic overcoating, square polished
edges, 1/4-inch thick.


 


3. Wire Glass: Clear,
polished both sides, square wire mesh of woven stainless steel wire 1/2 inch x
1/2 inch grid: 1/4 inch thick.


 


4

















 


4. Tempered Glass: 1/4 inch thick, no tong marks. UL
rated for 1-hour rating.


 


5. Spacers: Neoprene.


 


6. Tape to be poly-iso-butylene.


 


D.
Schedule:


 


1. Type A: 1/4-inch thick mirror, annealed, heat
strengthened, or full tempered as required.


 


2. Type B: 1/4 inch thick clear float glass,
annealed, heat strengthened, or full tempered as required.


 


3. Type C: 1/4-inch thick wire glass plate, square
pattern “Baroque”


 


LIGHT GAUGE METAL FRAMING


 


SCOPE:
All materials and labor necessary for the installation of metal framing and
related accessories.


 


A.
Structural Studs: 14 gauge punched channel studs with knurled screw-type
flanges, prime-coated steel. Manufacturer: United States Gypsum SJ or approved
equal: Submit cut-sheet of material.


 


B.
Partition Studs: 20 gauge studs with key-hole shaped punch-outs at 24 inches on
center. Manufacturer: United States Gypsum ST or approved equal.


 


C.
Fasteners for Structural Studs: Metal screws as recommended by metal system
manufacturer. Weld at all structural connection points.


 


D.
Reinforce framed door and window openings with double studs at each jamb
(flange-to-flange and weld) and fasten to runners with screws and weld.
Reinforce head with 14 gauge double stud same width as wall. Screw and weld.


 


E.
Provide all accessories as required to fasten metal-framing per manufacturers
recommendations.


 


F.
Provide and install flat-strapping at all structural walls (walls with concrete
footings beneath the walls). Minimum bracing shall be 25% of structural walls
shall be braced with flat-strapping per Manufacturer’s recommendations. Weld at
all strap ends and at all intermediate studs.


 


G.
Provide foundation clips at 4’-0” on center at structural walls. Anchor with
1/2 inch diameter by 10 inch long anchor bolts.


 


5

















 


H.
Non-structural interior partitions shall be anchored with power-driven
fasteners at 4’-0” on center at the concrete slab.


 


ACOUSTIC CEILING SYSTEM


 


SCOPE:
All materials and labor for the installation of the Acoustic Ceiling System
including T-bar system, Acoustic Ceiling Panels, Suspension wiring and
fastening devices and Glued-down Ceiling Panels.


 


A.
Manufacturer: Armstrong, or approved equal. Exposed T-bar system; factory
painted; steel construction; rated for the intermediate duty.


 


D.
Acoustical Tile: “Second Look”, conforming to the following:


 


1. Size: 24 x 48 inches.


 


2. Thickness: 3/4 inches.


 


3. Composition: Mineral.


 


4. NRC Range: .55 to .60.


 


5. STC Range: 35 to 39.


 


6. Flame Spread: ASTME84,0-25, UL Label, 25 or
under.


 


7. Edge: Tegular, Lay-in.


 


8. Surface Color: White.


 


9. Surface Finish: Factory-applied washable vinyl
latex paint.


 


G.
Installation to be per ASTM C636 structural testing. Lateral support for each
96 square feet of ceiling flared at 45 degrees in 4 directions.


 


H.
Provide clips for panel uplift restraints at all panels, 2 per panel.


 


GYPSUM WALLBOARD


 


SCOPE:
Provide all materials and labor for the installation of Gypsum Wallboard
including all accessories and finishes.


 


A.
Standard Gypsum Wallboard: ASTM C36; Ends square cut, tapered edges.


 


B.
Fire Restraint Gypsum Wallboard: ASTM C36, 5/8 inches thick Type X. Ends square
cut, tapered edges. See Drawings for locations.


 


C.
Moisture-resistant gypsum wallboard: ASTM C630-90.


 


D.
Joint-reinforcing Tape and Joint Compound: ASTM C475, as manufactured by or
recommended by wallboard manufacturer. Minimum 3 coat application for a smooth
finish.


 


E.
Corner Bead: Provide at all exposed outside corners;


 


F.
L-shaped edge trim: Provide at all exposed intersections with different
materials.


 


6

















 


G.
All work shall be done in accordance with the USG recommended method of
installation.


 


1. Finish: smooth.


 


PAINTING


 


A.
Paint Manufacturers: ICI, Dunn-Edwards Corporation, Kelly Moore.


 


B.
Paint colors shall be selected by the Architect.


 


C.
Painting Schedule: Provide for 4 different color applications


 


1. P-1: “Field”. Color to be selected.


 


2. P-2: “Accent”. Color to be selected.


 


3. P-3: “Accent”. Color to be selected.


 


4. P-4: “Accent”. Color to be selected.


 


D.
Interior Gypsum Wallboard:


 


1. Primer: Vinyl Wall Primer/Sealer.


 


2. 1 stand 2nd Coat: Eggshell Acrylic Latex.


 


E.
Metal Framing:


 


1. Primer: Red Oxide, shop-primed (for
non-galvanized) if exposed.


 


F.
Wood Work, Wood Doors:


 


1. Two coats of transparent finish. Sand lightly
between coats with steel wool.


 


INSULATION


 


A.
R-15 in exterior walls.


 


B.
R-25 on Roof.


 


C.
Sound batts in conference, restroom and lobby walls.


 


ROOF EQUIPMENT


 


A.
Stainless steel mechanical platform and associated access stairs and guard rail
system


 


7

















 


B.
EIFS roof screen to match detail of exterior GFRC Panel.


 


FULL HEIGHT GLAZED PARTITION


 


A.
1/4” glazed partition, in building standard aluminum frame


 


FINISHES


 


A.
Vinyl Composite Tile: Armstrong stonetex, 12” x 12”


 


B.
Resilient Base: Burke rubber wall base, 4” top set or cove, as appropriate for
VCT or carpet.


 


C.
Window Coverings: Miniblinds, Levelor, color: TBD D. Carpet:


 


Option 1: Designweave,
Windswept Classic 30 oz. (Direct glue installation) or equal


 


Option2: (cut pile)
Designweave, Tempest Classic 32 oz. (Direct glue Upgrade installation) or
equal.


 


Option 3: (cut pile)
Designweave, Sabre Classic, 38 oz. (Direct glue Upgrade installation) or equal.


 


KITCHEN FIXTURES


 


A.
Sink: Ekkay stainless steel, GECR-2521-L&R, 20 gauge, 25”w x 211/4”D x 53/8” D, ADA compliant.


 


B.
Kitchen Faucet: American Standard, Silhouette Single control, #4205 series,
spout 93/4”.


 


KITCHEN APPLIANCES


 


A.
Dishwasher


 


Option 1: GE GSD463DZWW, 24”
W x 243/4” D x
34-35” H, 9 gallons/wash


 


Option 2: Bosch, SHU5300
series, 5.4 gallons/wash-with water heater


 


B.
Refrigerator:


 


Full Size: GE, “S” series
top-mount, TBX16SYZ, 16.4 cubic feet, recessed, recessed handles, 28” W x 29
1/8” D x 66 3/4” H, white, optional factory installed ice-maker.


 


Under-counter:


 


Option 1: U-Line, #29R, 3.5
cubic feet, white


 


Option 2: U-Line, Combo
29FF, Frost Free with factory installed icemaker, 2.1 cubic feet, white


 


8

















 


C.
Microwave: GE, Spacemaker II JEM25WY, Midsize, 9 cubic feet, 800 watts, 2313/16” W x 1113/16” D x 125/16” H


 


Option 1: Under counter
Mounting Kit, #4AD19-4


 


Option 2: Accessory Trim Kit
# JXB37WN, 261/8”
W X 181/4” H


 


                    (built-in
application)


 


D.
Garbage Disposal: ISE #77, 3/4” horsepower


 


E.
Water Heater: To be selected by DES.


 


PUBLIC SPACES


 


FRONT BUILDING LOBBY


 


Walk off Matts: Design
Materials, Sisel, Calcetta #68, Natural, 100% coir


 


Floor Tile: 3/8” x 18” x 18”
Stone or Marble set in mortar bed in recessed slab as approved by Owner


 


Transition Strips: 5/16” x 11/2” x random
length strips, cherry wood flooring


 


Corridor Carpeting: Carpet
over pad, Atlas, New Vista or as approved by Owner


 


Lobby Ceiling: Suspended
gypsum board ceiling, Painted


 


Building Lobby: Akari shades
hanging #J1-93/4”
x 5’-2” or equal as Pendant Fixture approved by owner.


 


Stairs & P &
P Railing, Modesto with custom cherry guard rail Mezzanine Railing: Rep: Oliver
Capp (805) 241-8810. Hand and guard railing P & P Railings,
Modesto stainless steel railing with horizontal spirals and custom cherry guard
rail cap by others, fittings dark gray metallic or equal as approved by Owner.


 


BACK BUILDING LOBBY & EMERGENCY STAIRS


 


Walk
off Matts: Design Materials, Sisal, Calcutta #68, Natural, 100% coir.


 


Treads &
Landings: Carpet covered concrete, as approved by Owner


 


Stringers,
Risers Painted steel stringer, eggshell & Handrails finish enamel.


 


Ceiling:
Suspended gypsum board ceiling.


 


9

















 


ELEVATORS


 


Cars:
(1) 2800 lb, (1) 3500 lb 150 ft/min by Otis


 


Elevator
Doors: Stainless Steel


 


Elevator
Interior Paneling: Cherry veneer with stainless steel reveals and railing


 


Elevator
Floor: Slate 3/8” x 18” x 18” tile as approved by Owner.


 


RESTROOMS


 


Counter
tops: Stone/marble or equal as approved by Owner


 


Walls
at Lavatories: Eggshell finish, latex paint, Benjamin Moore


 


Floor
at Toilets: 2” x 2” matte porcelain ceramic floor tiles, thin set, Dal-tile.


 


Walls
at Toilets: 2” x 2” matte porcelain ceramic floor tiles, thin set, Dal-tile.


 


Ceiling:
Suspended gypsum board ceiling.


 


Toilet
compartments:


 


A. Manufactured
floor-anchored metal toilet compartments and wall- hung urinal screens.


 


B. Approved Manufacturer,
Global Steel Products Corp, or approved equal.


 


C Toilet Partitions:
Stainless Steel finish.


 


D. Hardware: Hinges:
Manufacturer’s standard self-closing type that can be adjusted to hold door
open at any angle up to 90 degrees. Latch and Keeper: Surface-mounted latch
unit, designed for emergency access, with combination rubber-faced door strike
and keeper. Coat Hook: Combination hook and rubber-tipped bumper. Door Pull:
Manufacturer’s standard.


 


Ceramic Tile


 


A. Manufacturer: Dal-Tile or
approved equal.


 


B. Size: 41/4” x 41/4” for walls, 8 x
8 for floors, 3/4” liner strip as accent.


 


C. Glaze: Satin glaze for
walls, unglazed tile for floors.


 


D. Color: As selected by
Architect.


 


10

















 


E. Accessories: Base,
corners, coved cap and glazed to match


 


F. Wall and floor
installation: per applicable TCA


 


G. Waterproof Membrane:
Chloraloy or approved equal:


 


H. Tile Backer Board: 1/2
inch thick wonderboard


 


I. Grout: Commercial
Portland Cement Grout; Custom Building Products or approved equal


 


J. Mortar: Latex-Portland
cement mortar; Custom Building Products or approved equal.


 


RESTROOM:


 


Toilet: Kohler/American
Standard, commercial quality.


 


Urinal: Kohler/American
Standard, commercial quality.


 


Lavatory: Kohler/American
Standard, undercounter.


 


Lavatory Faucet: Kroin
handicap lavatory faucet #HV1LH, polished chrome.


 


Soap Dispenser Bobrick,
8226, Lavatory mounted for soaps, 34 fl oz.


 


Counter:


 


Toilet
accessories:


 


A. Manufacturer: Bobrick
Washroom Equipment, or approved equal.


 


B. Schedule: Model numbers
used in this schedule are Bobrick (134) unless otherwise noted.


 


C. Combination Paper Towel
Dispenser/Waste Receptacle: Recessed Model B-3944, one per restroom #7151 and
7152, and two per restroom #7050 and 7061.


 


D. Feminine Napkin Vendor:
Recessed, combination napkin/tampon vendor, Model B-3500 with 25 cent
operation, one per each women’s toilet room.


 


E. Soap Dispenser: Lavatory
mounted dispenser, Model B-822, one per each lavatory.


 


F. Toilet Paper Dispenser:
Surface-mounted, Model JRT, JR Escort, “In-Sight” by Scott Paper Company, one
per stall.


 


G. Toilet Seat Cover
Dispenser: Recessed, wall-mounted, Model B-301, one per stall.


 


H. Sanitary Napkin Disposal:
Recessed, wall-mounted, Model B-353, one per each women’s handicapped and odd
stall.


 


I. Sanitary Napkin Disposal:
Partition-mounted, Model B-354 (serves two stalls).


 


J. Grab Bars: Horizontal 36”
B6206-36: 42”, B62-6-42: one per each handicapped stall.


 


K. Mop/Broom Holders:
B223-24 (one per janitor closet).


 


L. Paper Towel Dispensers:
Recessed mounted, Model B-359, one at side wall adjacent to sink.


 


TENANT CORRIDORS


 


Walls: Eggshell finish,
latex paint, Benjamin Moore.


 


11














 


Floors: Level loop carpet over pad with 4” resilient
base as approved by Owner.


 


Ceiling 4” x 24” x 3/4” thick fine fissures type
mineral fiber, Armstrong Circus acoustical tile (beveled regular edge) in a 24”
x 24” Donn Fineline suspended grid, white finish.


 


Water Fountain: Haws Model #1114 Stainless Steel #4.


 


Cross Corridor 3’-6” x full height, 20 minute rated,
pocket assembly, Smoke Detector: on magnetic hold opens.


 


Corridor Carpyen “Berta” 35 cm x 33 cm, engraved
curved opaque Wall Sconce glass, 2 x 7-9W, #G-23 or equal as approved by owner


 


ELECTRICAL


 


A. 50 foot candles at
working surface.


 


B. 3 Bulb 2x4 parbolic
fixtures


 


C. 1/2 20 Amp circuit for
each hard wall office


 


D. Electrical Devices:
Recessed wall mounted devices with plastic cover plate. Color: white,
multi-gang plate 80400 Series duplex wall outlets.


 


E. Telephone/Data
Outlets: Recessed wall mounted, Standard 2x4 wall box with 3/4” EMT conduit
from box to sub out above ceiling walls pull string, cabling, terminations and
cover-plates, color: white, provided by tenants vendor. Tenant shall furnish
telephone backboard.


 


F. Light Switches: Dual
level rocker type, mounted at standard locations, with plastic cover plate,
5325-W cover plate single switch B0401-W, double switch B0409-W. Decors by
Leviton, colors: white, and will comply with Title 24 Energy Codes. Decors by
Leviton.


 


MECHANICAL


 


A. VAV Reheat system -
design/build. Each floor to have a minimum of thirty zones. Provide reheat
boxes on all zones on top floor and at all exterior zones on lower floor.
System shall meet T-24 for ventilation. Design shall be for 73 deg. Ambient
interior temperature and 2 1/2 watts per sq. ft. min.


 


FIRE
SPRINKLER SYSTEM


 


As required by NFPA &
factory mutual standard hazard, seismically braced.


 


12

















 


EXHIBIT D


TO


PACIFIC SHORES CENTER LLC


LEASE TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


COST RESPONSIBILITIES OF LESSOR AND
LESSEE


 


FOR SHELL TENANT IMPROVEMENTS


 


(See Attached)


 

















 


Exhibit D.


 


COST RESPONSIBILITIES OF LESSOR AND
LESSEE


 


A. Lessor is responsible
for the construction of the building shell improvements which shall include the
following items.


 


Soils Engineer


 


Civil Engineer


 


Architectural and
Structural Engineer


 


Landscaping


 


Empty Electrical Conduits will be provided from the
street to the future electrical room for a 2500 Amp. Service 277/480 volt
service capability for each building. The electrical conduits will be stubbed
up above the floor level


 


Lessor to provide two
vertical risers for fire sprinklers.


 


Testing and Inspection
for the shell.


Building Permits for the
Shell and exterior Premises. Utility Connection Fee (Fire Protection).


Area Fees


Construction Insurance


Construction Interest


Construction Taxes


Land Interest (if any)


Temporary Facilities


 


All site work to include:


 


Site clearing and grading


Excavating/Fill


Soil compaction


Site drainage


Site utilities


Paving


Curbs and gutters


Sidewalks


Parking lot lights


Curb painting and parking lot striping and markings as
required by the City.


 


Fences, to include
special enclosures for trash


Irrigation System


Lawns and planting


 


Building Shells to
include:


 


Concrete Formwork


 


2

















 


Concrete Reinforcement (if used)


Case in pace concrete (if used)


Metal decking (if used)


Metal framing (if used)


Rough carpentry as related to the Shell Millworks as
related to Shell


Glue-Lam structure (if used)


Building roof installation


Roofing tiles


Flashing


Drainage Systems for Roof


Roof Pitch Pans


Caulking/Sealants


Exterior Metal Door/Frames related to the Shell Wood
or Glass Doors as designated as related to the Shell Exterior Shell


Overhead Doors


Anodized Aluminum Windows


Finish Hardware as related to the Shell Doors


Glass Glazing as specific on plans Storefront if
desired


Gutters over front and rear entrances Exterior Loading
Docks as specific on plans Water Supply stubbed to the ground floor (first
floor of each Building only)


Roof drainage


Gas piping to face of building at First Floor
Telephone and computer conduits between Buildings All Government fees applying
to the exterior premises and shell.


 


B. The following shall be
considered interior improvements costs and shall be the responsibility of the
Lessee subject to the tenant improvement allowance as provided in the Lease:


 


Interior Building Permits


Gypsum drywall


Ceramic File or elate Tile in Lobbies


Quarry Tile as specified


Flag Pole


Metal door framing


All interior Wood doors and Hardware


Custom Woodwork


Specialized Security Construction


Interior Glass doors 2nd windows


 


3

















 


Acoustical Treatment (suspended ceiling)


Resilient flooring


Any special flooring


Carpeting


Sprayed fire proofing if required by the code on
structural


Steel and metal deck surfaces


Lift and Lift Operator


Interior Painting


Wall Coverings including Ceramic Tiles


Grease Interceptor if required


Drapery, Blinds or Shades


Pedestal floors


Toilet Compartments


Demountable partitions


Firefighting devices (Extinguishers)


Toilet and bath accessories


Lift (dock levelers)


Plumbing fixtures, trims and vertical piping


Interior electrical distribution Lighting


Electrical controls


Electrical Power Equipment


Built in Audio-Visual facilities


Built in Projection screens


Water Treatment Discharge


Sinks in Coffee Rooms


Lunch Room plumbing for vending machines


Specialized security systems


Specialized Halon fire Extinguishing systems


Fire sprinkler head drops and horizontal distribution


Piping off owner-installed vertical risers Specialized
caging


Special piping for Tank Farm (If installed)


Hot water heating system


Cool water system


HVAC units


Ducting controls


Air Tempering Systems


Elevators and elevator pits (Otis Elevator Lessor
Specs)


Mechanical platforms, screens and associated roof
accessories


Stairs


Electrical service (Lessor to provide exterior
conduits)


 


4

















 


EXHIBIT E


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


MEMORANDUM


OF


COMMENCEMENT OF LEASE TERM


 


Pursuant to Article III,
Section 3.01, paragraph (a) of the above- referenced Lease, the
parties to said Lease agree to the following:


 


1. The Commencement Date
of the Lease is , 2001 and the Lease Term commenced on said date. The
Expiration Date for the initial Lease Term is , 2013.


 


2. The date for
commencement of rent for the Building is , 2001.


 


3. Attached hereto as a
part hereof is a true and correct schedule of Base Rent.


 


4. The total Rentable
Area of the Building is ( ) rentable square feet.


 


Each person executing
this memorandum certifies that he or she is authorized to do so on behalf of
and as the act of the entity indicated.


 


	
   

  	
   

  
	
   

  	
  Executed as of
              ,
  2000 at Redwood City (San Mateo County), California.

  
	
   

  	
   

  
	
      

  	
  PACIFIC SHORES CENTER LLC  PHONE.COM, Inc.

  
	
   

  	
    a California corporation

  



 


 


	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Jay
  Paul

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:   Manager

  	
  (Type or print name)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Type or print name)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
											



 

















 


EXHIBIT E


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


SNDA


 


(See Construction And Permanent SNDA Samples Attached)


 

















 


RECORDING
REQUESTED AND WHEN


RECORDED
RETURN TO:


 


KEYBANK
NATIONAL ASSOCIATION


Real Estate Division


Mailcode WA-31-10-5285


700 Fifth Avenue, 52nd
Floor


Seattle, WA 98104-5099


Attn:


Loan
No.


 


SUBORDINATION, ACKNOWLEDGEMENT OF
LEASE ASSIGNMENT,


NONDISTURBANCE AND ATTORNMENT
AGREEMENT


AND ESTOPPEL CERTIFICATE


(Lease to Deed of Trust)


 


NOTICE:
THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING SUBJECT TO AND OF
LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST (DEFINED BELOW).


 


THIS AGREEMENT AND
CERTIFICATE is made this      day of                     ,
1990, between KEYBANK NATIONAL ASSOCIATION, a national banking association
(“Lender”) and                                 ,
a                                         
(“Tenant”).


 


Recitals


 


A.                                     
(“Landlord”), is the owner of real property (“Property”) located in                     
County, California, and legally described on Exhibit A.


 


B.
Tenant is a tenant of a portion of the Property (“Premises”) under a lease
(“Lease”) with Landlord dated                     .


 


C.
Lender has agreed to make a loan (“Loan”) to Landlord. In connection therewith,
Landlord has executed or proposes to execute, a Construction Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Fixture Filing (“Deed of
Trust”) encumbering the Property and securing, among other things, a promissory
note (“Note”) in the principal sum of                     
DOLLARS ($                    ),
of even date herewith, in favor of Lender, which Note is payable with interest
and upon the terms described therein. The Deed of Trust is to be recorded
concurrently herewith.


 


D. The
Deed of Trust constitutes a present assignment to Lender of all rights, title,
and interest of Landlord under the Lease.


 


2

















 


E.
Lender’s agreement to make the Loan is conditioned on Tenant’s specific and
unconditional subordination of the Lease to the lien of the Deed of Trust such
that the Deed of Trust at all times remains a lien on the Property, prior and
superior to all the rights of Lessee under the Lease, and Tenant’s agreement to
attorn to Lender if Lender obtains possession of the Property by foreclosure or
deed in lieu of foreclosure. Tenant is willing to do so in consideration of the
benefits to Tenant from the Loan and the Lease and Lender’s agreement not to
disturb Tenant’s possession of the Premises under the Lease.


 


NOW, THEREFORE, Lender
and Tenant agree as provided below.


 


1. Subordination. Tenant
hereby intentionally and unconditionally subordinates the Lease and all of
Lessee’s right, title and interest thereunder an in an to the Property to the
lien of the Deed of Trust and all of Lender’s rights thereunder, including any
and all renewals, modifications and extensions thereof and agrees that the Deed
of Trust and any and all renewals, modifications and extensions thereof shall
unconditionally be an at all times remain a lien on the Property prior and
superior to the Lease. Without limiting the generality of the foregoing, such
subordination shall include all rights of Tenant in connection with any
insurance or condemnation proceeds with respect to the Premises or Property.


 


2. Acknowledgment. Tenant
understands that Lender would not make the Loan without this Agreement and the
subordination of the Lease to the lien of the Deed of Trust as set forth herein
and that in reliance upon, and in consideration of, this subordination,
specific loans and advances are being and will be made by Lender and, as part
and parcel thereof, specific monetary other obligations are being and will be
entered into which would not be made or entered into but for reliance upon this
subordination. This Agreement is and shall be the sole and only agreement with
regard to the subordination of the Lease to the lien of the Deed of Trust and
shall supersede and cancel, but only insofar as would affect the priority
between the Deed of Trust and the Lease, any prior agreement as to such
subordination, including, without limitation, those provisions, if any,
contained in the Lease which provide for the subordination of the Lease to a
deed or deeds of trust or to a mortgage or mortgages.


 


3. Use of Proceeds.
Lender, in making disbursement pursuant to the Note, the Deed of Trust or any
loan agreement with respect to the Property, is under no obligation or duty to,
nor has Lender represented that it will, see to the application of such
proceeds by the person or persons to whom Lender disburses such proceeds, and
any application or use of such proceeds for purposes other than those provided
for in such agreement or agreements shall not defeat this agreement to
subordinate in whole or in part.


 


4. Nondisturbance. Lender
agrees that Tenant’s possession of the Premises shall not be disturbed by
Lender during the term of the Lease, and Lender shall not join Tenant in any
action or proceeding for the purposes of terminating the Lease, except upon the
occurrence of a default by Tenant under the Lease and the continuance of such
default beyond any cure period given to Tenant under the Lease.


 


5. Attornment. If Lender
obtains possession of the Property by foreclosure or deed in lieu of
foreclosure, Tenant shall attorn to Lender, be bound to Lender in accordance
with all of the


 


3

















 


provisions of the Lease
for the balance of the term thereof, and recognize Lender as the landlord under
the Lease for the unexpired term of the Lease. Such attornment shall be
effective without Lender being (i) subject to any offsets or defenses or
otherwise liable, for any prior act or omission of Landlord, (ii) bound by
any amendment, modification, or waiver of any of the provisions of the Lease,
or by any separate agreement between Landlord and Tenant relating to the
Premises or Property, unless any such action was taken with the prior written
consent of Lender, (iii) liable for the return of any security or other
deposit unless the deposit has been paid to Lender, (iv) bound by any
payment of rent or other monthly payment under the Lease made by tenant more
then one (1) month in advance of the due date, or (v) bound by any
option, right of first refusal, or similar right of Tenant to Lease any portion
of the Property (other than the Premise) or to purchase all or any portion of
the Property. Lender’s obligations as landlord under the Lease after obtaining
possession of the Property by foreclosure or deed in lieu of foreclosure shall
terminate upon Lender’s subsequent transfer of its interest in the Property.


 


6. Termination of Lease.
Notwithstanding any other provision of this Agreement, in the event Lender
obtains ownership of the Property by foreclosure of deed in lieu of foreclosure
and the Lease requires the landlord to construct any improvements on the
Premises or Property, the Lease shall terminate unless (i) Lender delivers
written notice to Tenant expressly assuming such obligation with ten (10) days
after the foreclosure sale or acceptance of the deed in lieu of foreclosure, or
(ii) Tenant waives such obligation by delivery of written notice to Lender
within ten (10) days after receiving notice of foreclosure or deed in lieu
of foreclosure.


 


7. Covenants of Tenant.
Tenant covenants and agrees with Lender as follows:


 


(a) Tenant
shall pay to Lender all rent and other payments otherwise payable to Landlord
under the Lease upon written demand form Lender. the consent and approval of
Landlord to this Agreement shall constitute an express authorization for Tenant
to make such payments to Lender and a release and discharge of all liability of
Tenant to Landlord for any such payments made to Lender.


 


(b) Tenant
shall enter into no material amendment or modification of any of the provisions
of the Lease without Lender’s prior written consent.


 


(c) Tenant
shall not subordinate its rights under the Lease to any other mortgage deed of
trust, or security instrument without the prior written consent of Lender.


 


(d) In
the event the Lease is rejected or deemed rejected in any bankrupt proceeding
with respect to Landlord, Tenant shall not exercise it option to treat the
Lease as terminated under 11 U.S.C. (S) 365(h), as amended.


 


(e) Tenant
shall not accept any waiver or release of Tenant’s obligations under the Lease
by Landlord, or any termination of the lease by Landlord, without Lender’s
prior written consent.


 


(f) Tenant
shall promptly deliver written notice to Lender of any default by Landlord
under the Lease. Lender shall have the right to cure such default within thirty
(30) days after the receipt of such notice. Tenant further agrees not to
invoke any of its remedies under the Lease


 


4

















 


until the thirty
(30) days have elapsed, or during any period that Lender is proceeding to
cure the default with due diligence, or is attempting to obtain the right to
enter the Premises and cure the default


 


8. Effect of Assignment.
Notwithstanding that Landlord has made a present assignment of all of its
rights under the Lease to Lender, Lender shall not be liable for any of the
obligations of Landlord to Tenant under the Lease until Landlord has obtained
possession of the Property by foreclosure or deed in lieu of foreclosure, and
then only to the extent provided in paragraph 3 above.


 


9. Estoppel
Certifications. Tenant hereby certifies and represents to Lender as provided
below.


 


(a) The
Lease constitutes the entire agreement between Landlord and Tenant relating to
the Premises and the Property.


 


(b) The
Lease is in full force and effect, and has not been amended, modified, or
assigned by Tenant, either orally or in writing.


 


(c) No
Payments to become due under the Lease have been paid more than one (1) month
in advance of the due date.


 


(d) Tenant
has no present claim, offset or defense under the Lease, and Tenant has no
knowledge of any uncured breach or default by Landlord or Tenant under the
Lease or of any event or condition which, with the giving of notice or the
passage of time or both, could constitute a breach or default under the lease.


 


(e) Tenant
has no knowledge of any prior sale, transfer, assignment, hypothecation or
pledge of Landlord’s interest under the Lease or of the rents due under the
Lease.


 


(f) Except
as otherwise provided in the Lease, Tenant has made no agreements with Landlord
concerning free rent, partial rent, rebate or rental payments, setoff, or any
other type of rental concession.


 


10. Costs and Attorney’s
Fees. In the event of any claim or dispute arising out of this Agreement, the
party that substantially prevails shall be awarded , in addition to all other
relief, all attorneys’ fees and other costs and expenses incurred in connection
with such claim or dispute; including without limitation those fees, costs, and
expenses incurred before or after suit, and in any arbitration, and any appeal,
any proceedings under any present or future bankruptcy act or state
receivership, and any post-judgement proceedings.


 


11. Notices. All notices
to be given under this Agreement shall be in writing and personally delivered
or mailed, postage prepaid, certified or registered mail, return receipt
requested, to Lender at the address indicated on the first page of this
Agreement, and to Tenant at its address indicated below. All notices which are
mailed shall be deemed given three (3) days after the postmark thereof.
Either party may change their address by delivery of written notice to the
other party.


 


5

















 


12. Miscellaneous. This
agreement may not be modified except in writing and executed by the parties
hereto or their successors in interest. This agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
assigns. As used herein, “Landlord” shall include Landlord’s predecessors and
successors in interest under the Lease, and “Lender” shall include any
purchaser of the Property at any foreclosure sale. All rights of Lender herein
to collect rents on behalf of Landlord under the Lease are cumulative and shall
be in addition to any and all other rights and remedies provided by law and by
other agreements between Lender and Landlord or others. If any provision of
this Agreement is determined to be invalid, illegal or unenforceable, such
provision shall be considered severed from the rest of this Agreement and the
remaining provisions shall continue in full force and effect as if such
provision had not been included. This Agreement shall be governed by the laws
of the State of California. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same original.


 


DATED this     
day of                     ,
1999


 


NOTICE:
THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING SUBJECT TO AND OF
LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST (DEFINED ABOVE).


 


IT IS RECOMMENDED THAT,
PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR
ATTORNEYS WITH RESPECT HERETO.


 


	
   

  	
   

  	
   

  
	
   

  	
  “LENDER”

  	
   

  
	
   

  	
  KEYBANK
  NATIONAL 

  ASSOCIATION,  

  a National banking
  association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its

  	
   

  
				



 


6

















 


	
   

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


	
  CONSENTED
  AND AGREED TO:

  	
   

  	
   

  
	
  “LANDLORD”

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  a

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


ALL SIGNATURES MUST BE ACKNOWLEDGED


 


7

















 


	
  STATE OF CALIFORNIA

  	
  )

  	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  	
   

  
	
  COUNTY OF)

  	
  )

  	
   

  	
   

  	
   

  



 


On                                     ,
1999, before me,                                         
the undersigned, a notary public in and for said state, personally appeared                                         ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.


 


WITNESS my hand and
official seal.


 


Notary Public


 


8

















 


EXHIBIT A


TO


SUBORDINATION, NONDISTURBANCE AND


ATTORNMENT AGREEMENT AND ESTOPPEL
CERTIFICATE


 


Legal Description


 


The Property is located
in
                                
County, California and is legally described as follows:


 


9

















 


SCHEDULE TWO


TO


EXHIBIT F


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


SNDA


 


(See Construction and Permanent SNDA Samples Attached)


 


These samples are subject
to negotiation by Tenant.


 

















 


SUBORDINATION, NON-DISTURBANCE


AND ATTORNMENT AGREEMENT


 


THIS SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) made as of the
[    ] day of [                    ],
1997, by and among Nomura Asset Capital Corporation (“Leader”),                         
(“Tenant”) and                                 
(“Landlord”).


 


WITNESSETH:


 


WHEREAS,
Lender has agreed to make a loan (the “Loan”) of up to [                    ]
to Landlord;


 


WHEREAS,
the Loan will be evidenced by a deed of trust note (the “Note”) of even date
herewith made by Landlord to order of Lender and will be secured by, among
other things, a deed of trust, assignment of leases and rents and security
agreement (the “Deed of Trust”) of even date herewith made by Landlord to
Lender covering the land (the “Land”) described on Exhibit A attached
hereto and all improvements (the “Improvements”) now or hereafter located on
the land (the Land and the Improvements hereinafter collectively referred to as
the “Property”); and


 


WHEREAS,
by a lease dated as of [                    ]
(which lease, as the same may have been amended and supplemented, is
hereinafter called the “Lease”), Landlord leased to Tenant approximately [                    ]
square feet of space located in the Improvements (the “Premises”); and


 


WHEREAS,
the parties hereto desire to make the Lease subject and subordinate to the Deed
of Trust.


 


NOW,
THEREFORE, the parties hereto, in consideration of the covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, hereby agree as follows:


 


1. The Lease, as the same
may hereafter be modified, amended or extended, and all of Tenant’s right,
title and interest in and to the Premises and all rights, remedies and options
of Tenant under the Lease, are and shall be unconditionally subject and
subordinate to 


the Deed of Trust and the
lien thereof, to all the terms, conditions and provisions of the Deed of Trust,
to each and every advance made or hereafter made under the Deed of Trust, and
to all renewals, modifications, consolidations, replacements, substitutions and
extensions of the Deed of Trust, so that at all times the Deed of Trust shall
be and remain a lien on the Property prior and superior to the Lease for all
purposes; provided, however, and Lender agrees, that so long as (A) no
event has occurred and no condition exists, which would entitle Landlord to
terminate the Lease or would cause, without further action of Landlord, the
termination of the Lease or would entitle Landlord to dispossess Tenant from
the Premises, (B) the term of the Lease has commenced and


 














 


Tenant is in possession
of the Premises, (C) the Lease shall be in full force and effect and shall
not have been otherwise modified or supplemented in any way without Lender’s
prior written consent, (D) Tenant shall duly confirm its attornment to
Lender or its successor or assign by written instrument as set forth in
Paragraph 3 hereof, (E) neither Lender nor its successors or assigns shall
be liable under any warranty of construction contained in the Lease or may
implied warranty of construction, and (F) all representations and
warranties made herein by Tenant shall be true and correct as of the date of
such attornment; then, and in such event Tenant’s leasehold estate under the
Lease shall not be terminated, Tenant’s possession of the Premises shall not be
disturbed by Lender and Lender will accept the attornment of Tenant.


 


2. Notwithstanding
anything to the contrary contained in the Lease, Tenant hereby agrees that in
the event of any act, omission or default by Landlord or Landlord’s agents,
employees, contractors, licensees or invitees which would give Tenant the
right, either immediately or after the lapse of a period of time, to terminate
the Lease, or to claim a partial or total eviction, or to reduce the rent
payable thereunder or credit or offset any amounts against future rents payable
thereunder, Tenant will not exercise any such right (i) until it has given
written notice of such act, omission or default to Lender by delivering notice
of such act, omission or default, in accordance with Paragraph 8 hereof, and (ii) until
a period of not less than sixty (60) days for remedying such act, omission
or default shall have elapsed following the giving of such notice.
Notwithstanding the foregoing, in the case of any default of Landlord which
cannot be cared within such sixty (60) day period, if Lender shall within
such period proceed promptly to cure the same (including such time as may be
necessary to acquire possession of the Premises if possession is necessary to
effect such cure) and thereafter shall prosecute the curing of such default
with diligence, then the time within which such default may be cured by Lender
shall be extended for such period as may be necessary to complete the curing of
the same with diligence. Lender’s cure of Landlord’s default shall not be
considered an assumption by Lender of Landlord’s other obligations under the
Lease. Unless Lender otherwise agrees in writing, Landlord shall remain solely
liable to perform Landlord’s obligations under the Lease (but only to the
extent required by and subject to the limitation included with the Lease), both
before and after Lender’s exercise of any right or remedy under this Agreement.
If Lender or any successor or assign becomes obligated to perform as Landlord
under the Lease, such person or entity will be released from those obligations
when such person or entity assigns, sells or otherwise transfers its interest
in the Premises or the Property.


 


3. Without limitation of
any of the provisions of the Lease, in the event that Lender succeeds to the
interest of Landlord or any successor to Landlord, then subject to the
provisions of this Agreement including, without limitation, Paragraph 1 above,
the Lease shall nevertheless continue in full force and effect and Tenant shall
and does hereby agree to attorn to and accept Lender and to recognize Lender as
its Landlord under the Lease for the then remaining balance of the term
thereof, and upon request of Lender, Tenant shall execute and deliver to Lender
an agreement of attornment reasonably satisfactory to Lender.


 


4. If Lender succeeds to
the interest of Landlord or any successor to Landlord, in no event shall Lender
have any liability for any act or omission of any prior landlord under the
Lease which occurs prior to the date Lender succeeds to the rights of Landlord
under the Lease, nor any liability for claims, offsets or defenses which Tenant
might have had against Landlord. In no


 


2

















 


event shall Lender have
any personal liability as successor to Landlord and Tenant shall look only to
the estate and property of Lender in the Land and the Improvements for the
satisfaction of Tenant’s remedies for the collection of a judgment (or other
judicial process) requiring payment of money in the event of any default by
Lender as Landlord under the Lease, and no other property assets of Lender
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant’s remedies under or with respect to the Lease.


 


5. Tenant agrees that no
prepayment of rent or additional rent due under the Lease of more than one
month in advance, and no amendment, modification, surrender or cancellation of
the Lease, and no waiver or consent by Landlord under the terms of the Lease,
shall be binding upon or as against Lender, as holder of the Deed of Trust, and
as Landlord under the Lease if it succeeds to that portion, unless consented to
in writing by Lender. In addition, and notwithstanding anything to the contrary
set forth in this Agreement, Tenant agrees that Lender, as holder of the Deed
of Trust, and as Landlord under the Lease if it succeeds to that position,
shall in no event have any liability for the performance or completion of any
initial work or installations or for any loan or contribution or rent
concession towards initial work, which are required to be made by Landlord (A) under
the Lease or under any related Lease documents or (B) for any space which
may hereafter become part of said Premises, and any such requirement shall be
inoperative in the event Lender succeeds to the position of Landlord prior to
the completion or performance thereof. Tenant further agrees with Lender that
Tenant will not voluntarily subordinate the Lease to any lien or encumbrance
without Lender’s prior written consent.


 


6. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute and be construed as one and the same
instrument.


 


7. All remedies which
Lender may have against Landlord provided herein, if any, are cumulative and
shall be in addition to any and all other rights and remedies provided by law
and by other agreements between Lender and Landlord or others. If any party
consists of multiple individuals or entities, each of same shall be jointly and
severally liable for the obligations of such party hereunder.


 


8. All notices to be
given under this Agreement shall be in writing and shall be deemed served upon
receipt by the addressee if served personally or, if mailed, upon the first to
occur of receipt or the refusal of delivery as shown on a return receipt, after
deposit in the United States Postal Service certified mail, postage prepaid,
addressed to the address of Landlord, Tenant or Lender appearing below, or, if
sent by telegram, when delivered by or refused upon attempted delivery by the
telegraph office. Such addresses may be changed by notice given in the same
manner. If any party consists of multiple individuals or entities, then notice
to any one of same shall be deemed notice to such party.


 


3

















 


Lender’s
Address:


 


Nomura
Asset Capital Corporation


Two
World Financial Center, Building B


New
York, New York 10281-1198


Attention:
Ms. Sheryl McAfee


 


Tenant’s
Address:


 


 


Attention:


 


 


Landlord’s
Address:


 


 


Attention:


 


9. This Agreement shall
be interpreted and construed in accordance with and governed by the laws of the
State of California.


 


10. This Agreement shall
apply to, bind and inure to the benefit of the parties hereto and their
respective successors and assigns. As used herein “Lender” shall include any
subsequent holder of the Deed of Trust.


 


11. Tenant acknowledges
that Landlord has assigned to Lender its right, title and interest in the Lease
and to the rents, issues and profits of the Property and the Property pursuant
to the Deed of Trust, and that Landlord has been granted the license to collect
such rents provided no Event of Default has occurred under, and as defined in,
the Deed of Trust. Tenant agrees to pay all rents and other amounts due under
the Lease directly to Lender upon receipt of written demand by Lender, and
Landlord hereby consents thereto. The assignment of the Lessee to Lender, or
the collection of rents by Lender pursuant to such assignment, shall not
obligate Lender to perform Landlord’s obligations under the Lease.


 


[NO FURTHER TEXT ON THIS PAGE]


 


4

















 


IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.


 


	
   

  	
   

  
	
   

  	
  NOMURA
  ASSET CAPITAL 

  CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [LANDLORD]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  [TENANT]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


5

















 


	
  STATE OF CALIFORNIA

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On                             ,
before me, a Notary Public in and for said state, personally appeared                                         
    , personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.


 


WITNESS my hand and
official seal.


 


	
   

  	
   

  
	
  (SEAL)

  



 


6

















 


EXHIBIT G


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


SIGNAGE EXHIBIT


 


(To be provided)


 

















 


EXHIBIT H


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


Guaranty of Lease


 


(Intentionally Omitted)


 

















 


EXHIBIT I


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


HAZARDOUS MATERIALS DISCLOSURE


 


Lessor
has provided Lessee, and Lessee acknowledges that it has received and pursuant
to Section 17.22(b) of the Lease, reviewed same, a copy of each of
those certain documents entitled: (i) PHASE I, ENVIRONMENTAL SITE
ASSESSMENT PACIFIC SHORES CENTER, REDWOOD CITY, CALIFORNIA, Prepared for: The
Jay Paul Company, San Francisco, California, Prepared by: IRIS ENVIRONMENTAL,
Oakland, California, December 20, 1999, Job No. 99-122A; and (ii) PHASE
II, ENVIRONMENTAL SITE ASSESSMENT, PACIFIC SHORES CENTER, 1000 SEAPORT
BOULEVARD, REDWOOD CITY, CALIFORNIA, Prepared for: The Jay Paul Company, San
Francisco, California, Prepared by: IRIS ENVIRONMENTAL, Oakland, California, January 14,
1999, Job No. 99-122-B


 


 


	
   

  	
  LESSEE

  
	
   

  	
   

  
	
   

  	
  Phone.com, Inc.  

  a California
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Type or print name)

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Type or print name)

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  



 

















 


EXHIBIT J


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


NOTICE TO TENANTS AND TRANSFEREES OF


CURRENT OR FUTURE USES OF ADJACENT
PORT PROPERTY


 


Notice
is hereby given to all lessees, tenants and transferees of land or interests in
land located within Pacific Shores Center of the presence or potential future
presence of Port related industrial activities on Port property adjacent to and
west of Pacific Shores Center. All recipients of this notice should be aware of
the following facts:


 


1. The parcel of Port
property adjacent to Pacific Shores Center to the northwest shown on the Exhibit         
attached hereto (the “Port Parcel”) is now or may be developed for Port related
maritime and industrial uses similar to those occupying other properties along
the west side of Seaport Boulevard and to the west of Pacific Shores Center.


 


2. Such Port related
maritime and industrial activities are those which are permitted by the general
industrial zoning of the City of Redwood City and may include heavy industrial
land uses, including uses which involve the receipt, transport, storage or
management of hazardous wastes, aggregates, cement, gravel and similar
materials, including the outdoor storage and handling of such materials.


 


3. Pacific Shores Center
Limited Partnership, on behalf of itself, its successors and assigns, has
recognized, accepted and approved such uses of the Port Parcel subject to the
utilization of Best Available Management Practices in the development and use
of the Port Parcel. Best Available Management Practices are defined on Exhibit         
attached hereto.


 


4. Despite the use of
Best Available Management Practices on the Port Parcel by the Port and its
lessees and licensees and despite Pacific Shores Center Limited Partnership’s
efforts to ensure compatibility between such uses and those in Pacific Shores
Center, it is possible that such uses will cause emissions into the air of dust
or other particulate matter, or noise or odorous substances which may be
offensive to or be perceived as a nuisance by occupants of Pacific Shores
Center.


 

















 


5. Pursuant to covenants
made by Pacific Shores Center Limited Partnership on behalf of its successors
and assigns, tenants and lessees, the tenants, lessees and transferees of
Pacific Shores Center Limited Partnership have approved and accepted such
neighboring uses subject to their utilization of Best Available Management
Practices.


 


6. Any actions to enjoin
the continuation of such uses or to recover any damages to persons or property
related to their operations are subject to a requirement for prior notice found
in recorded covenants by Pacific Shores Center Limited Partnership. The
following language is excerpted from such covenants:


 


“In the event that either party hereto believes that
the other has failed to perform any covenant made herein in favor of the other,
at least ten (10) days prior to the commencement of any action to enforce
the covenants hereunder or to recover damages for the breach thereof, that
party who believes that a failure to perform has occurred (the “Complaining
Party”) shall give written notice (the “Notice”) to the party alleged not to
have performed the covenant (the “Non-Complaining Party”) of the specific
nature of the alleged failure and of the intent of the complaining Party to
take action to remedy the breach by the Non-Complaining Party. In the event
that the nature of the alleged failure to perform is such that the same cannot
reasonably be cured within ten (10) days after receipt of the Notice (the “Notice
Period”), the Non-Complaining Party shall not be deemed to be in violation of
its covenants and no action shall be commenced by the Complaining Party if,
within the Notice Period, the Non-Complaining Party commences such cure and
thereafter diligently and continuously prosecutes the same to completion within
a reasonable time. Provided, however, that the Complaining Party shall not be
precluded from recovering any actual damages suffered by reason of the alleged
failure to perform prior to or after delivery of the Notice, whether or not
such failure is thereafter cured.”


 


2

















 


EXHIBIT K


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


NOTICE TO PACIFIC SHORES TENANTS,
LESSEES,


SUCCESSORS, ASSIGNS AND TRANSFEREES
REGARDING


CURRENT OR FUTURE USES OF ADJACENT
RMC LONESTAR


AND PORT PROPERTY


 


Notice is hereby given to
all tenants, lessees, successors, assigns and transferees of land or interest
in land located within the Pacific Shores Center of the presence or potential
future presence of maritime and industrial activities on RMC Lonestar and Port
of Redwood City property west and adjacent to Pacific Shores Center. Recipients
of this notice should be aware of the following:


 


1. The RMC Lonestar
property and parcels of port property adjacent to and west of Pacific Shores
Center are shown on the map attached to this notice. The RMC Lonestar and Port
properties are now devoted to, or will be developed for, maritime and
industrial uses.


 


2. These maritime and
industrial uses are those which are permitted by the “Heavy Industry” General
Plan designation and general industrial zoning of the City of Redwood City.
These uses include, by way of example and not limitation, uses involving the
receipt, transport, storage, handling, processing or management of aggregates,
cement, concrete, asphalt, soil or other landscaping materials, recyclable
metals and plastics, recyclable concrete and asphalt, chemicals, petroleum
products, hazardous wastes, and similar materials, including indoor storage,
mixing and handling of these materials.


 


3. These uses may cause,
on either a regular or intermittent basis, air emissions, including without
limitation, dust and other particles, odors, vibrations, loud noises, and heavy
truck, rail or marine vessel traffic. These uses may have a visual, aesthetic
or other aspects that may be offensive or perceived as a nuisance by occupants
of Pacific Shores Center.


 

















 


EXHIBIT L


TO


PACIFIC SHORES CENTER LLC


LEASE


TO


PHONE.COM, INC.


FOR


Pacific Shores Center


Building 9


Redwood City, California


 


RULES AND REGULATIONS


 


1. Lessee and Lessee’s
employees shall not in any way obstruct the sidewalks, entry passages,
pedestrian passageways, driveways, entrances and exits to the Project or the
Building, and they shall use the same only as passageways to and from their
respective work areas.


 


2. Any sash doors,
sashes, windows, glass doors, lights and skylights that reflect or admit light
into the Common Area of the Project shall not be covered or obstructed by the
Lessee. Water closets, urinals and wash basins shall not be used for any
purpose other than those for which they were constructed, and no rubbish,
newspapers, food or other substance of any kind shall be thrown into them.
Lessee shall not mark, drive nails, screw or drill into, paint or in any way
deface the exterior walls, roof, foundations, bearing walls or pillars without
the prior written consent of Lessor, which consent may be withheld in Lessor’s
sole discretion. The expense of repairing any breakage, stoppage or damage
resulting from a violation of this rule shall be borne by Lessee.


 


3. No awning or shade
shall be affixed or installed over or in the windows or the exterior of the
Premises except with the consent of Lessor, which may be withheld in Lessor’s
discretion.


 


4. No boring or cutting
for wires shall be allowed, except with the consent of Lessor, which consent
may be withheld in Lessor’s discretion.


 


5. Lessee shall not do
anything in the Premises, or bring or keep anything therein, which will in any
way increase or tend to increase the risk of fire or the rate of fire insurance
or which shall conflict with the regulations of the fire department or the law
or with any insurance policy on the Premises or any part thereof, or with any rules or
regulations established by any administrative body or official having
jurisdiction, and it shall not use any machinery therein, even though its
installations may have been permitted, which may cause any unreasonable noise,
jar, or tremor to the floors or walls, or which by its weight might injure the
floors of the Premises.


 


6. Lessor may reasonably
limit weight, size and position of all safes, fixtures and other equipment used
in the Premises. If Lessee shall require extra heavy equipment, Lessee shall
notify Lessor of such fact and shall pay the cost of structural bracing to
accommodate it. All damage done to the Premises or Project by installing,
removing or maintaining extra heavy equipment shall be repaired at the expense
of the Lessee.


 

















 


7. Lessee and Lessee’s
officers, agents and employees shall not make nor permit any loud, unusual or
improper noises nor interfere in any way with other Lessees or those having
business with them, nor bring into or keep within the Project any animal or
bird or any bicycle or other vehicle, except such vehicle as Lessor may from
time to time permit.


 


8. No machinery of any
kind will be allowed in the Premises without the written consent of Lessor.
This shall not apply, however, to customary office equipment or trade fixtures
or package handling equipment.


 


9. All freights must be
moved into, within and out of the Project only during such hours and according
to such reasonable regulations as may be posted from time to time by Lessor.


 


10. No aerial or
satellite dish or similar device shall be erected on the roof or exterior walls
of the Premises, or on the grounds, without in each instance, the written
consent of Lessor. Any aerial installed without such written consent shall be
subject to removal without notice at any time. Lessor may withhold consent in
its sole discretion.


 


11. All garbage,
including wet garbage, refuse or trash shall be placed by the Lessee in the
receptacles appropriate for that purpose and only at locations prescribed by
the Lessor.


 


12. Lessee shall not burn
any trash or garbage at any time in or about the Premises or any area of the
Project.


 


13. Lessee shall observe
all security regulations issued by the Lessor and comply with instructions
and/or directions of the duly authorized security personnel for the protection
of the Project and all tenants therein.


 


14. Any requirements of
the Lessee will be considered only upon written application to Lessor at Lessor’s
address set forth in the Lease.


 


15. No waiver of any rule or
regulation by Lessor shall be effective unless expressed in writing and signed
by Lessor or its authorized agent.


 


16. Lessor reserves the
right to exclude or expel from the Project any person who, in the judgment of
the Lessor, is intoxicated or under the influence of liquor or drugs, or who
shall in any manner do any act in violation of the law or the rules and
regulations of the Project.


 


17. Lessor reserves the
right at any time to change or rescind any one or more of these rules and
regulations or make such other and further reasonable rules and
regulations as in Lessor’s judgment may from time to time be necessary for the
operation, management, safety, care, and cleanliness of the Project and the Premises,
and for the preservation of good order therein, as well as for the convenience
of other occupants and tenants of the Project. Lessor shall not be


 


2

















 


responsible to Lessee or
the any other person for the non-observance or violation of the rules and
regulations by any other tenant or person. Lessee shall be deemed to have read
these rules and have agreed to abide by them as a condition to its
occupancy of the Premises.


 


18. Lessee shall abide by
any additional rules or regulations which are ordered or requested by any
governmental or military authority.


 


19. In the event of any
conflict between these rules and regulations, or any further or modified rules and
regulations from time to time issued by Lessor, and the Lease provisions, the
Lease provisions shall govern and control.


 


20. Lessor specifically
reserves to itself or to any person or firm it selects, (i) the right to
place in and upon the Project, coin-operated machines for the sale of
cigarettes, candy and other merchandise or service, and (ii) the revenue
resulting therefrom.


 


3

















 


EXHIBIT M


 


ESTIMATED TAX ASSESSMENT FOR PACIFIC
SHORES


 


$12,000,000 @ 6% with
15-year amortization divided by 1,641,534 SF = $0.06 (1)


 


For
Phone.com:


 


279,584 x $0.06 = $16,775
per month


 






(1)   Interest rate subject to change.


 

















 


EXHIBIT N


 


EARLY CONSTRUCTION ITEMS


 


·             Shell Fire Protection 


 


·             Perimeter Stairs 


 


·             Fireproofing of Steel 


 


·             Elevator Pits 


 


·             Elevator Penthouse Structure 


 


Openwave Sublease


 

















 


EXHIBIT “B”


 


FORM OF BILL OF SALE


 


For
the sum of One Dollar ($1.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, Openwave Systems Inc., a Delaware
corporation (“Seller”), does hereby sell, transfer, and convey to PDL BioPharma, Inc.,
a Delaware corporation (“Buyer”), the personal property and furniture, fixtures
and equipment owned by Seller and located within that certain premises commonly
known as 1400 Seaport Boulevard, Redwood City, California 94062 as more
particularly described on Schedule 1 attached hereto and made a part
hereof (“Personal Property”).


 


Buyer
acknowledges that Seller is selling and Buyer is buying the Personal Property
on an “as is, where is, with all faults” basis, and that Buyer is not relying
on any representations or warranties of any kind whatsoever, express or
implied, except as expressly set forth below, including, without limitation,
any implied warranties as to merchantability or fitness for a particular
purpose.


 


Seller
represents and warrants to Buyer, however, that Seller is conveying title to
the Personal Property to Buyer free and clear of any liens or encumbrances.
Buyer shall take delivery of the Personal Property in its “as-is, where-is,
with all faults” condition. Seller shall have no obligation to repair or
replace any item of Personal Property.


 


This
Bill of Sale shall be governed by and construed in accordance with the laws of
the State of California. Any waiver by either party of any breach of any term
or condition of this Bill of Sale shall not operate as a waiver of any other
breach of such term or condition or of any other term or condition, nor shall
any failure to enforce such provision hereof operate as a waiver of such
provision or of any other provision hereof, nor constitute nor be deemed as a
waiver or release of any other party for anything arising out of, connected
with or based upon this Bill of Sale. In the event of any litigation involving
the parties arising out of this Bill of Sale, the prevailing party shall be
entitled to recover from the other party such reasonable attorneys’ fees and
costs as may reasonably be incurred, as awarded by the court hearing the
matter.


 


This
Bill of Sale may be executed in one or more counterparts, each of which shall
be deemed an original but all of which taken together shall constitute one and
the same instrument.


 


[Signatures appear on next page.]


 


Openwave Sublease


 

















 


Dated this     
day of             ,
20    .


 


 


	
  SELLER:

  	
  OPENWAVE SYSTEMS INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  BUYER:

  	
  PDL BIOPHARMA, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


Openwave Sublease


 

















 


EXHIBIT “C”


 


PERMITTED HAZARDOUS MATERIALS


 


(See attached)


 


Openwave Sublease


 

















 


EXHIBIT “D”


 


PDL BIOPHARMA, INC. LIST OF PLANS, LICENSES AND PERMITS


 


	
   

  	
   

  	
  Inspecting Authority

  	
   

  	
  Frequency

  
	
  Plans

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Injury Illness
  Prevention Plan

  	
   

  	
  Cal OSHA

  	
   

  	
  Anytime

  
	
  Biosafety Plan

  	
   

  	
  ”

  	
   

  	
  ”

  
	
  Radiation Safety Plan

  	
   

  	
  ”

  	
   

  	
  ”

  
	
  Chemical Hygiene Plan

  	
   

  	
  ”

  	
   

  	
  ”

  
	
  Hazard Communication
  Plan

  	
   

  	
  ”

  	
   

  	
  ”

  
	
  Emergency Action Plan

  	
   

  	
  ”

  	
   

  	
  ”

  
	
  Hazardous Materials
  Business Plan

  	
   

  	
  Fremont Fire

  	
   

  	
  Annual

  
	
  AAALAC Accreditation
  program

  	
   

  	
  AAALAC

  	
   

  	
  Complaint

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Licenses

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CA – Business License

  	
   

  	
   

  	
   

  	
   

  
	
  DHS - Radiation Use
  License

  	
   

  	
  DHS

  	
   

  	
  Anytime

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Permits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fremont City -
  Hazardous Materials Permits A/B/D

  	
   

  	
  Fremont Fire

  	
   

  	
  Annual

  
	
  Alameda County -
  Medical waste Permits A/B/D

  	
   

  	
  Ala. County

  	
   

  	
  Annual

  
	
  BAAQMD – Emergency
  Generator Permits A/B/D

  	
   

  	
  AQMD

  	
   

  	
  Complaint

  
	
  DEA – Controlled
  Substances

  	
   

  	
  DEA

  	
   

  	
  Violation

  



 


Openwave Sublease


 

















 


EXHIBIT “E”


MOST RECENT RECONCILIATION


 


[to be attached]


 


Openwave Sublease